Aalborg University

Studyboard of Civil Engineering

Sofiendalsvej 9-11
Phone 99 40 84 84
Fax 99 40 85 52
http://byggeri.aau.dk
Title:
X
Project:
Semesterproject
Projectperiod:
BL2, springsemester 2016
Participants:

Synopsis:

Dana Polacec
Lucia Muresan
Mihail Iuga

Supervisor:
Jesper Kranker Larsen
Circulation figures: X
Pages: X
Annex pages: X
Completed: X

Table of Contents
1 Introduction

1.1

Construction Market In The Nordic Countries . . . . . . . . . . . . . . . . .

1.2

Construction Market in Denmark . . . . . . . . . . . . . . . . . . . . . . . .

1.3

NCC Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.3.1

History of NCC Group . . . . . . . . . . . . . . . . . . . . . . . . . .

1.3.2

NCC Construction and Civil Engineering. . . . . . . . . . . . . . . .

NCC Construction Denmark . . . . . . . . . . . . . . . . . . . . . . . . . . .

1.4.1

NCCs Mission, Vision and Values . . . . . . . . . . . . . . . . . . .

1.4.2

NCC Strategy for 2016-2020 . . . . . . . . . . . . . . . . . . . . . . 11

2 Methods

13

1.4

2.1

NCC Group Financial Anlysis - D.A.D.1 . . . . . . . . . . . . . . . . . . . . 14

2.2

NCC Denmark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.2.1

External Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

2.2.2

Internal Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

2.2.3

SWOT and TOWS Analysis . . . . . . . . . . . . . . . . . . . . . . . 24

2.2.4

Interviews + Meetings with NCC contact person . . . . . . . . . . . 25

3 Analysis

27

3.1

NCC Group Financial Analysis - D.A.D.1 . . . . . . . . . . . . . . . . . . . 27

3.2

NCC Contruction Denmark . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

3.2.1

External Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

3.2.2

Internal Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

3.2.3

SWOT and TOWS Analysis . . . . . . . . . . . . . . . . . . . . . . . 68

4 Problem Definition
4.1

73

Delimitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

5 Solutions

75

5.1

Mission, Vision and Values

5.2

The companys Goals for 2016-2020. . . . . . . . . . . . . . . . . . . . . . . 77

5.2.1

. . . . . . . . . . . . . . . . . . . . . . . . . . . 75

Key strategies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77

6 Implementation

85

7 Conclusion

87

III

Table of Contents
8 Further Research

IV

89

Introduction

1.1

Construction Market In The Nordic Countries

The global construction industry has regained growth in the last few years, after the big
impact of the crisis from 2007. Compared to the previous year, 2015 meant a growth of
3.8% annual average in the pace of expansion and for 2016-2020, this increase is expected
to rise up to 3.9% annual average, according to Construction Intelligence Center.[?]
In the northern part of Europe was recorded a similar trend, with small deviations. In
Denmark and Norway the investment in the construction sector have decreased in 2015,
in Sweden and Finland can be noticed an ascendant trend. Henrik Ekber is mentioning is
his article that in Denmark the decreasing trend is noticeable more in the construction of
premises market, rather than in the housing market. In Norway the decreasing trend in
the construction market is more marginal, but in the next few years the trend will slightly
change, but the growth will not be as strong as in Sweden or Finland. The ascendant
trend from Finland is due to a growing production of apartments and to an increased
construction of premises.
Compared to 2014, in Finland, the construction market has grown with 5%, with a strong
trend towards increased urban concentration in the figures, according to Jens Linderoth,
an analyst at industry facts.[?]
Germany is an important player on the construction market, being the main employer on
the market. In 2015, the construction market has grown with 3% and for the 206 and 2017
the expansion is expected to be 3.5% and 3.8% according to Siegfried Ellermann.[?]
In the Northern Part of Europe, the construction market is an important player in the
national economy.

The Scandinavia construction market is dominated by players as

Veidekke ASA , followed by Skanska Norge AS, OBOS BBL and NCC Construction AS.
Further, the Swedish Group NCC will be described as this project is focusing on NCC
Denmark. A general image of the Group is facilitating the understanding of the position
and the role that NCC Dk plays is the NCC Group.

1. Introduction

1.2

Construction Market in Denmark

According to CPH post online, 2014 has been a productive year for the building industry
in Denmark having at least 19% more activities that the previous year. From the industry
experts point of view, in 2015 this trend will not only keep up with the 2014 achievements,
but it will also improve by 5%. The building and construction industry is considered the
main industry due to the fact that it represents 80% of Denmarks assets.[?]
The Construction industry and its employment rate are in a directly proportional
relationship. If the industry is rising then automatically the number of people employed in
the same sector is getting higher too. The evolution of the employment rate in Denmark in
the Construction sector over the years is shown in Figure ??. It can be seen that 2007 was
the most beneficial year, followed by a quick drop in the industry around 2008/2010. Since
then, the business has had short periods of recovery along with periods of stagnation.
Starting with the year 2014, the recovery has been stronger and it is ongoing for the
industry as well as for the employment rate.[?]

Figure 1.1: Employment in Denmark in the construction sector.

Many of the companies present on the Danish market are focusing on sustainability and
providing proper working conditions. The minister for Climate, Energy and Building,
Rasmus Helveg Petersen, is stating that in order to keep the business prosper and with
a continuous growth, efficiency and good relationship between the companies and the
stakeholders is the key.

1.3. NCC Group

1.3
1.3.1

Aalborg University

NCC Group
History of NCC Group

NCC, abbreviation for Nordic Construction Company, was legally formed in January 1989
as a previous merge between two companies(JCC and ABV). At the present, is one of the
leading companies in the construction field from the Northern European countries with a
history of 27 years in the construction industry.

Figure 1.2: Geographical distribution of NCCs market.

With approximately 18000 employees, the Group has extended its projects from the Nordic
countries to Russia and Germany with a significant percentage, as well as in Estonia and
Latvia, but at a smaller scale. With sales of 57 billion SEK in 2014 and with a vision
that aims to renew the industry and deliver exceptional sustainable solutions, NCC is one
of the leading construction and property development companies in the Northern Europe.
Having its roots in Sweden, the company not only has numerous projects in the area, but
it is also the leading company in the construction market owning 47% of NCCs activities.

1. Introduction

Figure 1.3: NCCs Organization 2015

According to Figure 1.3, NCC group is divided in three business areas. While the Industrial
and Civil engineering areas are mainly present in the Nordic Countries, the Development
area is focusing on expanding the regions and metropolitan cities in Sweden, Finland,
Denmark, Norway, Germany, Latvia, Estonia and Russia (St.Petersburg). Even if NCC
group is divided in three different areas, connections can be found between them in terms
of conception, labor and material exchange. Analyzing the operating profit or loss of all
the business areas, the Development is by far the most profitable sector showing significant
improvement from 2014 to 2015, while the Industrial and Construction and civil engineering
areas have either stagnated or declined. Based on these facts, the company seeks to focus
more on the development of NCC housing and NCC property development.

1.3.2

NCC Construction and Civil Engineering.

NCC Construction and Civil Engineering is the business area of NCC group that runs
different types of projects that include residential and commercial properties, public
buildings (schools, hospitals, sport centers), infrastructure and other types of buildings.
Having its origins in Sweden, the companys presence in the Nordic region is facilitated by
the similarities related to conception, working methods, climate and culture between the
Nordic Countries.

1.4. NCC Construction Denmark

Aalborg University

Figure 1.4: Geographical distribution of orders received

According to Figure 1.4, Sweden remains the strongest market for NCC in the Civil
engineering area showing a significant improvement from year 2014 to 2015.

Except

Norway, every country has more or less showed improvement in the value of orders received.
The decline in Norways value of orders received might be related to the loss of credibility
that NCC infrastructure has received due to the negative conclusion in the "Norvegian
asphalt case".

1.4

NCC Construction Denmark

Between 1996 and 1999, construction companies as Rasmussen & Schitz, Armton, Superfos
Construction and Phoenix have merged and so NCC Denmark formed.
NCC Denmark is subsidiary to NCC Group and is contributes to the Groups assets with
13 %. In Denmark, NCC covers four business areas: Building, Infrastructure, Industry
and Property Development owned totally by NCC AB. 2.255 employees are contributing
to the companys values such as: honesty, respect, confidence and pioneering spirit.
NCC Building is the largest business area in NCC Denmark. They work with all types
of contract: main contract, turnkey contract and trade by trade contract. The company
prefers a larger project that challenges them because they use their experience and skills
to come up with the best solutions.

1. Introduction

Figure 1.5: The evolution of NCC Denmark for the last two years

According to the annual report from 2015, compared to the previous year, 2015 fallowed
a descendant trend. The order received have dropped from 5587 to 4529 in 2015, the
net sales had actually an ascending trend, growing from 4330 to 5160. Compared to the
previous year, the company have registered a profit of 159, compared to 111 from 2014.
The operating margin is also positive compared to previous year, evolving from 1.8% to
2.8 %. Compared to NCC Dk ,the Total Construction of the Group, is fallowing an similar
trend.

Figure 1.6: The Evolution of the NCC Group for the last two years

As can be noticed in the fallowing diagram, the evolution of the operating margins is cyclic
and relatively stable, with slight fluctuation, as in the warm season these will reach higher
level and in the cold season these will decrease. When the evolution of the order received
is regarded, it can be noticed that the trend is is different as their number is increased in
the the first and the last quarter of the year. The net sales have also a cyclic evolution,
but it starts from the lower level in the first quarter and is increasing gradually to the end
6

1.4. NCC Construction Denmark

Aalborg University

of the year.

Figure 1.7: The evolution of NCC Denmark

In collaboration with its stakeholders, NCC finds the best sustainable solutions to satisfy
customers needs and to be cost-effective and to be high-quality.

The purpose is to

contribute to the society development from a sustainable perspective. The objective of

the company is to be the customers first choice as the main player in the construction
market by creating value for its stakeholders.

Figure 1.8: NCC Dk Business Model

Evolution of NCC
The evolution of NCC can be divided in three phases. The first one consisted in a reversal
of the business implying reduction of the cost and higher efficiency. The second phase
consisted in prioritizing of the Construction and civil engineering market, although that
1

trebuie adaugat la figura un nou business

1. Introduction
targeted the part of the company considered non-profitable and non-core operation, which
were sold and the capital reinvested in consolidation of operations. The third phase, the
one of the profitable growth, focused on sustainable solutions is the actual phase.
The success of the NCCs strategy is due to its long-term strategic key issues:
Best companys image in the eyes of the customer
Market leader
Organic growth obtain by costs reduction
Synergy between operations and support function
Prioritizing the Housing development growth in all countries
Sustainability a key factor always considered.

1.4. NCC Construction Denmark

1.4.1

Aalborg University

NCCs Mission, Vision and Values

According to [?], the purpose of a company can be usually defined through four ways:
Mission, Vision, Values and Objectives. The Mission, the vision and the values provide a
longer term view of the organization and on its fundamental strategy. On the other hand,
the goals provide a short term view on the companys performance.

NCCs Mission

The mission statement defines clearly what the organization is

fundamentally there to do. According to [?], the mission gives the way to get where
an organization aims to get, telling about the present, leading to the future
NCCs mission is to be a responsible enterprise and it is the reason why they go to
work every day [?].

The company builds and develop future environments for daily

activities, such as working, living and communication. Together with their customers,
NCC identify cost-effective, needs-based and high-quality solutions, generators of added
value for stakeholders and support a sustainable social development. ?
NCCs Values Statements of corporate values represent the foundation on which the
company was built. They represent the core principles that guide an company strategy
and define the way it should operate.

NCC Values
Pioneering
Spirit

Confidence

Honesty & Respect

Figure 1.9: NCCs Values

As can be seen in the figure 1.9, NCCs values are: honesty, respect, confidence and
pioneering spirit, a relatively new value added in 2013. The honesty refers to be true to
themselves and their stakeholders, responsibility in the way they perform business and
reliability towards stakeholders. The respect should be mutual and towards diversity and
9

1. Introduction
others opinion and to assume the own decisions and to use carefully the resources. Mutual
trust is an important value for NCC because they say directly and in a confident way their
thoughts and they choose carefully their words. also they honor their commitments, the
task being performed at a high quality standards. The newest NCCs values, the employees
and the partners are encouraged and supported to think innovatively and creatively, in
order to reach a long-term sustainable development.
NCC had adopted a Code of Conduct, which is based on the companys values and on
voluntary initiatives performed by NCC, as World Economic Forum Partnering Against
Corruption (PACI) and the UN Global Compact. These includes a set of principles
referring to human rights management, work methods, environment and corruption. All
employees are suppose to comply with the principles from the Code of Conduct and in
order to achieve that, regular training is conducted.
The company wants to increase diversity because it generates creativity and innovation and
to reduce discrimination in the construction field. Therefore, an increase in the proportion
of employees with other ethnic background is desired, regardless ethnicity, sex, age, religion,
sexual preferences or lifestyle.
NCCs Vision A vision statement focuses on the future that the company seeks to
create and it expresses an aspiration towards performance.
NCCs vision is to renew their industry and offer extraordinary sustainable solutions, being
saw as their traction and it defines where they aim to be on a long term, being used as
a guideline for their current and future action directions. [?] NCC sustainability efforts
are based on the companys vision to actively engage in society for a sustainable future.
A priority for the company is to reduce to zero the workplace accidents.
On one hand, for NCC Danmark renewal refers to the way they build houses on their
platform concept, to the green thinking, to the office solutions, their approach to the
quality or to the customers. On the other hand, to deliver superior sustainable solutions
is a priority for the organization and it is about striving for the best sustainable solution
for their customers and communities, environmentally, economically and social speaking.

NCCs Goals

Goals or objectives are statements of specific outcomes that are meant

to be achieved.
The new strategy for 2016-2020 has set the goal to grow the company by an average of 5
percent per year and to increase operating margin from 3 to at least 4 percent. Another
goal is to get annual return on equity after taxes at the minimum percent of 20 and to
lower the net debts to a lower level than 2.5 times EBIT and the solvency at the least 20
percent.
10

1.4. NCC Construction Denmark

Aalborg University

A priority is to reduce by 50 percent the workplace accident rate, compared to 2015 and
to improve the environmental performance by halving the carbon emissions until 2020.
One of the companys long-term goals is that the recyclable waste should be recycled or
reused, not disposed of in land. The percentage of renewable and recyclable materials and
components in NCCs product range should increase.

1.4.2

NCC Strategy for 2016-2020

NCC Strategy for 2016-2020 is based on their vision to renew their industry and
extraordinary sustainable solutions. The strategy was developed and founded on the new
trends of the macro-environment. The conduction of their external analysis has revealed
five mega-trends that will influence the construction market: urbanization, globalization,
sustainability, the battle for the best talent and new technologies. The company saw these
trends as an opportunity, not a threat. The micro-environment revealed their strengths,
such as wide geographical spread , a strong expertise upon the construction market and a
strong position in the value chain close to the customer.[?] According to Klaus Kaae, Adm
Director of NCC Danmark, also the risk management is a strong focus of the company.
Peter Wgstrm, CEO of NCC says that that the strategy for the future is to be more
specialized because the analysis showed that there is more chance to create growth
and profitability if a company is more specialized. In consequence, they increase their
profitability with their new specialized Nordic organization. By focusing on segments
that show promising growth, such as large infrastructure projects and renovation or new
acquisitions, he predicts the growth of the company. [?]

Figure 1.10: Must Win Battle

11

1. Introduction
The company strategic initiatives are summarized in three "Must Win Battle", illustrated
in 1.10. One "battle" is to become more efficient and profitable business by making the
processes more efficient, centralizing the procurement processes, skills development and
digitized information flows. Although that NCC is a leader in the VDC (Virtual Design and
Construction) field, the ambition is to straighten their position and to continue cultivating
its advantages. Another tool to increase the efficiency is through totally digitization,
NCC being part of its development. VDC and totally digitized information management
are complementary because VDC involves new work approaches. a culture of continuous
improvement through value chain is supported on the basis of Lean principles. NCC wants
to develop strategic partnerships with suppliers in order to improve the purchasing process.
By market excellence, NCC seeks to focus on construction and renovation segment because
it shows more promising. The cities in Denmark have a large proportion of older buildings,
so there is a big potential on the refurbishment of properties sector. New legislation for
the energy refurbishment of properties and rising demand by property owners to minimize
the operating costs are two factors that drive to the development of NCC Construction.
NCC wants to expand through investment in the form of acquisitions, PPP projects and
project development. [?]
The large size of the company is seen as an opportunity to continue to increase and
to develop customer offerings and to develop further the production methods, technical
platforms and IT and business systems for the entire Group. The strong relationship with
their suppliers is seen as a possible way to reduce the costs.
From 2016, there are no more four land-based construction and civil engineering units,
they have been reorganized in two business areas, NCC Infrastructure and NCC Building.
By doing this, the Group is more united that never, so the information sharing is made
in a more efficient way. The new strategy is focused on the employees development, a
generator of profit. The company predicted the future changes in the construction market,
so to take the company in a good direction, they need leaders and employees well prepared,
dynamic and proactive to any changes. [?]

12

Methods

The purpose of the entire analysis is to actually reach enough aspects of NCC Denmark in
order to be able to emphasis on one in particular and develop strategies and improvements
in the certain area.
NCC Sweden is the mother company and as it is already known, it has offices in several
other countries including Denmark. The total profit gained by these subcompanies is
automatically taken over by the mother company. Considering these facts, the first step in
the present analysis is focused on the entire activity of NCC Company as a group, with the
purpose of showing whether NCC is financially and economically strong enough to sustain
future possible improvements at different levels.

INTERNAL

EXTERNAL

D.A.D.

PESTLE
5 FORCES

SWOT & TOWS

MVV

GOALS

Balanced Scorecard

Figure 2.1: Framework

13

2. Methods

2.1

NCC Group Financial Anlysis - D.A.D.1

The D.A.D Model is a tool developed by the Management Center for Technological
Transfer, aimed to realize the multi-criteria diagnostic of a company. The purpose of
it is to formulate the base for the new strategy. The model has an heuristic approach
because of its unknown target which is the analysis if the companys evolution. More
information about this model can be found on [?]
The method provides the possibility to quantify the results and it assures a high degree of
adaptability, using variable coefficients of importance. The method is based on qualitative
information obtained mostly from interviews and questionnaires.
The primary information have been provided in the beginning of the report when the
company and the Construction market have been descried briefly. The complete image of
the company status will be obtained through the criteria that will be adopted, pinpointing
the critic points which will determine the main strategy.
To facilitate the investigation, the criterion have been grouped in 6 analyze direction
focusing on the main managerial activities in a company, starting with : the Financial
Management DAD which concerns the financial wealth of the company. The companys
ability to be competitive on the market is shown in The Adaptability to the markets
requirements DAD and the Technical and Production Management DAD hightails the
present level of the company regarding technological progress. The Quality Management
DAD regards the confidence level that the company shows regarding to the quality of its
products. The quality of the managerial process at an organizational level is evaluated
in The General Management DAD. The Human Resource Management DAD fallows the
human resource evolution in a company and the exploitation of its potential.
Each direction is evaluated based on some criteria, which are evaluated, based on their
importance, with an importance coefficient k from 1 to 5.
For the analysis of NCC Group, only the financial DAD will be used because it is wanted to
highlight the mother companys possibility to support the financial activity of the derived
companies.
Financial situation The purpose of this analyze direction is to evaluate at the level
of the entire company the balance between financial resource(internal or external)
and the technical uses in an exchange cycle.
The analyze is made through a group of reports characteristic to the financial balance:
The weight of borrowed capital in turnover which measures the level of companys
debts and is best when the report is low because that means the company can pay its
debts in short time. Because the criteria is considered to have a medium importance,
14

2.1. NCC Group Financial Anlysis - D.A.D.1

Aalborg University

its importance coefficient K will be 2

The evolution of net global trading capital measures how many days from the turnover
are covered by the net global trading capital and its growth is wanted. Because the
criteria is extremely important, in this case, K is equal to 5
The profitability of the activity measures the companys capacity to create its own
resources for funding. The ascendant trend is optimal and when it is under 0.1, a
immediate solution should be found. In this case, K is equal to 2
The financial profitability evaluates the health of the company by measuring the financial resources created by the companys functioning. This criteria is extremely
important, so k will be equal to 5.
The productivity of invested capital shows the attractiveness of the business for the
investors by measuring the capacity of the non financial resources to create salable
products or services. The trend is wish to be ascendant, but the excess of them
compared to total assets means waste of capital. In this case, k is equal to 1.
The evolution of net debts gives information about the companys capacity to pay
the debs on short time without taking a loan. K is equal to 5, which means that this
criteria is extremely important.
The remuneration of the human factor The ascendant trend is wanted, but the acceleration of this ascendant trend indicates financial difficulties on short term. Because
of its medium importance, the criteria will have k equal to 2.
Financial autonomy rate indicates the companys dependence or independence towards banks. The trend is wanted to be ascendant, but a report bigger than 0.8
is not wanted because that means the company does not know how to get external
sources of founding. In this case, k will be equal to 2.
patrimonial liquidity can be seen as a guarantee for the investors because it measures
the level of the short term debts covered by actives with high liquidity. This criteria
get a k equal to 1.
Each criteria will receive a mark Nj on a scale from 1 to 5.

This measuring range

represents the scenario for the worst situation,meaning that the company fails to satisfy the
minimum requirements and the best scenario, proving the companys capacity to satisfy
the requirement at a high level. The financial situation of the company was analyzed for
the last 5 years, starting with 2011 and ending with 2015, when the last annual rapport
was made. The fact that the analysis was made for 5 years is a strong point because it
15

2. Methods
shows the evolution for a longer period, which gives more reliability to the report, although
that usually the evolution analysis is made on 3 years.
Based on the
Nj
marks and k importance coefficients, the aggregate mark for Financial DAD will be
calculated with the following formula:

NDADj

nj
nj
X
X
Ki)
Ki N i)/(
=(
1

2.2

NCC Denmark

The next step is targeting NCC Denmark specifically. As it is the main point of focus
of the project and the area where weaknesses are to be found, there will be two types
of analysis, external and internal. Even though NCC Denmarks internal analysis might
be more expanded, the external one is actually an important component in finding the
weaker point in their strategy as many of the external factors may have a major effect on
the inside pace in a matter of decisions, obstacles or even chances.

2.2.1

External Analysis.

The environment for a company is a very powerful and sensitive subject. It can, through
numerous factors, create opportunities for the company, but it can also represent threats.
It is important that the environment is analysed at a full scale in order to be able to predict
and possible prevent any changes that could harm the companys goals and present status.
There are 3 layers composing the environment.

The
Company

PESTEL

Figure 2.2: Business Environment Layers

16

2.2. NCC Denmark

Aalborg University

The first and the closest one to the company is the competition within the market. The
following layer refers to the industry in which a company operates along with the other
companies producing the same type of product or service. Using the 5 forces analysis at
this step will help understand the potential threats as well as identifying which industries
or sectors are more likely to turn into successful investments.
The next layer is macro-environment consisting of all environmental factors that could
have a major/minor impact on the company. PESTEL analysis carries all the relevant
factors: political, economic, social, technological, ecological or legal. These factors can be
hardly delimitated as they may depend one from another, may have common basis or may
work together more effectively. Based on the PESTEL analysis, scenarios are made in order to extent or multiply the views of how environmental factors might affect the company.

PESTEL.
PESTEL is the method chosen to approach the external factors around NCC Denmark.
Political, economic, social, technological, legal and environmental factors all gathered as
PESTEL point out the most important aspects seen from different angles and worth taking
into consideration when developing a new strategy idea or plan. Depending on the industry,
some factors level of importance may differ according to the area of activity. In addition,
the PESTEL analysis is highly related to the SWOT analysis, and by default with TOWS
analysis available in the next step. It actually prepares the ground for the SWOT analysis
by shaping the overall picture with specific data regarding opportunity areas as well as
non-favorable areas.
As a general knowledge, this kind of analysis is vital for every business, no matter the
industry it is active within. Through these six PESTEL factors, it is created an idea of
what a company can do, should do or is not able to do considering the external factors
which cannot be controlled or changed.

17

2. Methods

Political

Economic

Legal

PESTEL
PESTEL
Environmental

Social

Technological

Figure 2.3: PESTEL Analysis factors

P stands for Political and may refer to any situations when the government can influence
the industry economically within different extents like tax policies, fiscal policies or trade
tariffs.
E strands for Economic, it may target the exchange rates, inflation rate, even the entire
economic growth or any other extents that could affect how the business operates.
S strands for Social and includes cultural trends, population growth rate, age distribution,
career opportunities, all leading to changes in the companys strategy according to the
markets demands.
T stands for Technological and it targets all research activities and new technological
equipment that could benefit or harm the company extending its effects on quality, costs
and time.
E strands for Ecological and it refers to any environmental related aspects like climate or
pollution as well as green and eco-friendly products.
L stands for Legal. This factor should be approached from both internal and external
points of view, as there might be certain laws that apply in the country and some others
that apply across borders: consumer law, employment law, health and safety regulations
etc.
The importance of the factors may differ from business to business and may target specific
18

2.2. NCC Denmark

Aalborg University

aspects depending on the type of industry. It can be easily described the area each factor
is targeting, but at the same time it is significantly difficult to point out exactly what to
focus on. This is the reason why adaptability is a strong element in this analysis. Since
the company is the core of the analysis, every PESTEL factor is changing according to the
companys point of view.

Porters five forces.

The next step in the analysis is targeting the competition of the company and the
attractiveness of the industry. Porters Five Forces method is describing the industry
structure as it is shown in the Figure ...
The competitive rivalry is positioned in the center, being surrounded by the other four
forces present in the method. Competitive rivals are the companies that provide the
same type of products or services and are targeting the same customers group. This can
be measured in a matter of how balanced the competition is, how fast is growing the
industry and the company itself or how different are the products or the services provided.
The threat of entry point defines how easy it is to enter a certain industry. Of course, an
attractive industry will always have high barriers to enter. Being a new competitor and
trying to enter the industry, producing process will start at a lower scale which will tend to
raise the prices until the experience reaches that point where efficiency is met. Producing
at a large scale means more materials from the suppliers and furthermore this will lead to
lower prices. But for a new company this is a point hard to reach, especially in the field
of constructions.
The next factor in this analysis is the threat of substitutes. As the substitutes are the
companies which offer products or services with similar characteristics with the ones from
the companies already established in the industry, they might grow fast and develop into a
dangerous threat. Here, the price might not be so decisive, as the substitutes can become
a threat even if they provide more expensive alternatives but with strong advantages.
Substitutes can have their origins far more beyond the industrys limits, so their number
can increase really fast, fact that is not desired since the industry becomes less attractive
if the threat of substitute is high.
The power of buyers is a strong factor in the analysis. If the number of buyers is large and
they are concentrated, the buyers can actually control the prices by demanding cheaper
products. The price difference between the suppliers products represents a strong point
in relation to the power of the buyers. As long as the prices do not have a wide range,
the buyer can easily switch from one supplier to another and this way gaining a superior
negotiation position.
Last, but not least comes the power of suppliers. Suppliers sometimes are the key in
19

2. Methods
an industry as they provide the products/materials needed for the companies within the
industry to produce the final product or service. Considering the facts related to the power
of buyers, the power of suppliers is the other way around. When their number is lower
and they dominate the industry, the suppliers have also more power over the buyers. As
long as it is more expensive for the buyer to switch suppliers, they will become relatively
dependent and will get weaker in the eyes of the suppliers.
The Porters Five Forces analysis is different from one type of industry to another, but the
main point is to shape a realistic picture of present market/industry in order to identify
the weak points which are to be prevented and the strong points which are to be explored.

2.2.2

Internal Analysis

Concerning the NCC Denmarks internal analysis, a more customized type of analysis
will be used. Within this internal analysis an overall image about NCC Denmark will be
created in a matter of economy, management, technology, human resources etc. The main
focus will be on the companys projects and profits, their number and their quality in order
to make an idea whether further investments in development are worth to be made or not.

Business Model Canvas

According to[?], a business model "articulates the logic, the data and other evidence that
support a value proposition for the customer, and a viable structure of revenues and costs
for the enterprise delivering that value". A business model is a part of a business plan and
according to [?], it is "an abstract representation of a companys strategy into a snapshot
of a companys blueprint".
The Business Model Canvas is a strategic management and entrepreneurial tool and it
allows to formulate a business model. It works for the start-up, but also for mature
business. [?] It contains 9 component:
Value proposition is about solving a problem or the customers needs
Customer segmentation refers to the market target; the value proposition should
match the Customer Segment demands and needs
Channels refers to the way how a product or service gets from the company to the
customer and how the company interacts with the customer in delivering value
Customer relationships is about how to get, keep and grow customers and about the
relationship with each Customer Segments an the way the company handles them
Revenue Streams is the way the company make money from each Customer Segment,
it reveals through which prices mechanism the company is capturing value

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Key Resources are the most important assets in a company used in the main activity
and it refers to the infrastructure to create, deliver and capture value
Key Activities are the main processes conducted in a company
Key Partners are the most important partners and resources suppliers, they being
able to leverage the business model since the company itself does not posses all main
resources or does not perform the all main key activities
Cost Structure refers to the expenses and costs to operate the main activities.
The first five components are the front end and is where the company interacts with the
customers and it generates revenue. The last four components represent the back end and
it makes the front end possible, but this part will not be seen by the customer and it drives
costs. [?]

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2. Methods

Strategic Capabilities
Concerning the NCC Denmarks internal analysis, the strategic capabilities will be the
core of this part. On one hand, the resources and the competences, gathered as operational capabilities, are the basic components for the strategic capabilities of a company.
On the other hand, dynamic capabilities are another component which is almost vital for
a companys success. After identifying these three elements, the strategic capabilities can
be divided into two sections: threshold capabilities and distinctive capabilities. At this
point, based on the strategic capabilities the competitive advantages can be shaped inside
the company. The purpose of every company is to have strong competitive advantages
which by definition they are advantages a company has over its competitors.

Strategic Capabilities
=
Threshold Capabilities + Distinctive Capabilities

Competitive
Advantages

Dynamic
Capabilities

Operational Capabilities

Resources and Competences

Figure 2.4: Strategic Capabilities.

The resources for the company are defined as the assets the company owns, while the
competences are the abilities a company has to use its resources in the most efficient
way. These components are the basic ones, but mixed with dynamic capabilities, they can
evolve in something truly benefic for the company. Dynamic capabilities have a significant
importance in a companys long term survival as they represent an ability to renew or
recreate the resources and the basic competences of the company and they are focused on
identifying solutions outside the current operational capabilities.
Depending on how much the dynamic capabilities are used, the strategic capabilities can
go from threshold to distinctive. Threshold capabilities are those capabilities that are
keeping a company to a standard level of survival. They represent the basic requirements
that need to be fulfilled in order for the company to be able to compete on the market and
actually be at the same level with its competitors. Threshold capabilities are important
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but they cannot create competitive advantages by themselves.

Distinctive capabilities are required because they refer to those capabilities that are unique
for a company and hard to imitate. More of dynamic capabilities lead to strong distinctive
capabilities and by default to strong competitive advantages.

23

2. Methods

2.2.3

SWOT and TOWS Analysis

Every business has strengths, weaknesses, opportunities or threads.

But does every

business know how to evaluate these? Most of the times, a companys thread becomes
the competitions opportunity. There is a fine line between strengths and weaknesses and
they can easily turn around. The ideal situation is that the company itself would be able
to turn its threads into opportunities. Here is where SWOT and TOWS analysis come in
handy. TOWS is just a different approach than SWOT even though they are composed
from the same acronyms. Strengths and Weaknesses are often reflected internally in the
company, while Opportunities and Threads are related more to the external factors. The
purpose of this analysis is to uncover opportunities and threads by using the strengths and
the weaknesses of the company. The more it is acknowledged, the more it can be controlled
and improved.
On one hand, strengths can be defined as what are the companys advantages, why are some
customers faithful, what are they appreciating, why is the company seen as a competition
for other companies and so on. Weaknesses are the opposite and they refer to what a
company is doing less than the competition or simply not doing good enough internally.
On the other hand, opportunities may change from one day to another since everything
from technology to population is changing so fast. In order to spot the opportunities, the
company must be always up to date with the current news and with the competitions
status. Threads, targeting the obstacles that might interfere or the lack of resources in
any way, might turn into opportunities as a consequence of a deep and detailed analysis.

Figure 2.5: Acronyms for SWOT

The best outcome can be found if the factors are combined two by two. The most common
that would pop out is strengths + threats (ST) because they are in fact opposite and
strengths should take over the threads and diminish their effects or why not avoid them
completely. But what about SO combination? Strengths and opportunities are both
positive and even though the tendency is to get an equilibrium between bad and good,
this combination actually works in making the best out of a situation. There are left two
other combinations: WO and WT. when opportunities are available for a company, the
weaknesses must be overcame. If there is any situation where weaknesses meet threats,
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then solution must be find in order to get something good out of two not benefic sides.
There are many ways of using SWOT and TOWS, but the key is to adapt the analysis to
the companys internal and external environment.

2.2.4

Interviews + Meetings with NCC contact person

The information obtained at the interview was qualitative. According to Steinar Kvale, in
[?], "the interviews give voice to common people" because it allows to present freely their
life situation in their own words, making two entities to openly interact: the researchers
and their subjects.
The interviewer ruled the interview due to the fact that he had scientific competence and
also he defined the interview situation, as he come with the predefined questions for the
subject. The interviewer initiated the interview, decided the topics, posed the questions
and fallowed the answers in a critical way and also he is the one that closes the conversation.
[?]
The interview was a one-directional questioning, as the interviewers role was to ask and
the interviewees role was to answer. The interview provides the interviewer description,
narratives and texts. Further, the obtained information is interpreted by the interviewer
according to his own research interests. [?]
The interview was structured in 23 questions and answer. When a question was not specific
enough, additional questions were added to be more comprehensible. It has been decided
by the interview will be held in spoken language in English and that it will be recorded to
facilitate the speed and the total quantity of received information.
The information from the interview will be used to complete the missing information in
the analysis part and also a conclusion will be drawn, to facilitate the problem statement
definition. The reason why the research group will not rely that much on the information
from the interview is that the validity and reliability were not assured in the desired way.
First, because only a single person was subject to the interview, the subjective answers
will not define the real image of the company.
Secondly, the interview was conducted at a later stage, meaning that it is just a completion
to the information that the interviews already have, so the research group will not be
willing to change the entire analyze based on the answers from the interview. Although,
the information received was only about NCC Construction Aalborg and the report focuses
on the entire company from Denmark.

25

2. Methods

26

Analysis

3.1

NCC Group Financial Analysis - D.A.D.1

1. Evolution of Turnover, Net profit and Average employees in the last 5 years

Figure 3.1: Company evolution for the past 5 years

Figure 3.2: Evolution of the Turnover for the past 5 years

27

3. Analysis

Figure 3.3: Evolution of the Net profit for the past 5 years

Figure 3.4: Evolution of the Average annual employees for the past 5 years

2. The weight of borrowed capital in turnover

C.I.
Total Debt
=
C.A.
Annual Turnover
This criteria is of medium importance, therefore a K=2 importance coefficient will
be assigned.
Results and graphs
C.I.
3.960 109
=
= 0.075
C.A.2011
52.535 109
6.061 109
C.I.
=
= 0.106
C.A.2012
57.227 109
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3.1. NCC Group Financial Analysis - D.A.D.1

Aalborg University

C.I.
5.656 109
=
= 0.098
C.A.2013
57.823 109
6.836 109
C.I.
=
= 0.120
C.A.2014
56.867 109
C.I.
4.552 109
=
= 0.073
C.A.2015
62.495 109

Figure 3.5: Evolution of the weight of borrowed capital in turnover

3. The evolution of net global trading capital

E.F.R.N =

Global net trading capital

360
Annual Turnover

Global net trading capital = Current Assets - Current Liabilities.

This criteria is of maximum importance, therefore a K=5 importance coefficient will
be assigned.
Results and graphs
E.F.R.N.2011 =

9.575 109
360 = 65.613
52.535 109

E.F.R.N.2012 =

12.989 109
360 = 81.710
57.227 109

E.F.R.N.2013 =

12.702 109
360 = 79.081
57.823 109

E.F.R.N.2014 =

12.847 109
360 = 81.329
56.867 109

E.F.R.N.2015 =

12.405 109
360 = 71.459
62.495 109

29

3. Analysis

Figure 3.6: Evolution of the net global trading capital

4. The profitability of the activity

R.A. =

Self financing Capacity

Annual Turnover

Self financing capacity = Net result of activity + amortizations + provisions

This criteria is of medium importance, therefore a K=2 importance coefficient will
be assigned.
Results and graphs

30

R.A.2011 =

1.874 109
= 0.036
52.535 109

R.A.2012 =

2.144 109
= 0.037
57.227 109

R.A.2013 =

1.974 109
= 0.034
57.823 109

R.A.2014 =

1.747 109
= 0.031
56.867 109

R.A.2015 =

1.887 109
= 0.030
62.495 109

3.1. NCC Group Financial Analysis - D.A.D.1

Aalborg University

Figure 3.7: Evolution of the profitability of activity

5. The financial profitability

R.F. =

Gross profit
Total income of the company

Total income of the company = operating incomes + financial incomes + other

incomes. This criteria is of maximum importance, therefore a K=5 importance coefficient will be assigned.
Results and graphs

R.F.2011 =

4.814 109
= 0.091
52.640 109

R.F.2012 =

5.503 109
= 0.096
57.366 109

R.F.2013 =

5.796 109
= 0.100
57.988 109

R.F.2014 =

5.691 109
= 0.100
56.913 109

R.F.2015 =

6.486 109
= 0.104
62.545 109

31

3. Analysis

Figure 3.8: Evolution of the financial profitability

6. The productivity of invested capital

P.C.I. =

Annual Turnover
Net fixed assets

This criteria is of low importance, therefore a K=1 importance coefficient will be

assigned. Results and graphs

32

P.C.I.2011 =

52.535 109
= 8.069
6.511 109

P.C.I.2012 =

57.227 109
= 8.044
7.114 109

P.C.I.2013 =

57.823 109
= 9.784
5.910 109

P.C.I.2014 =

56.867 109
= 8.892
6.395 109

P.C.I.2015 =

62.495 109
= 9.712
6.435 109

3.1. NCC Group Financial Analysis - D.A.D.1

Aalborg University

Figure 3.9: Evolution of the productivity of invested capital

7. The evolution of net debts

N=

Total debts on short therm

Capital earned on short term

This criteria is of maximum importance, therefore a K=5 importance coefficient will

be assigned.
Results and graphs
N2011 =

3.960 109
= 0.199
19.903 109

N2012 =

6.061 109
= 0.245
24.730 109

N2013 =

5.656 109
= 0.210
26.973 109

N2014 =

6.836 109
= 0.261
26.197 109

N2015 =

4.552 109
= 0.172
26.532 109

33

3. Analysis

Figure 3.10: Evolution of net debts

8. Conclusions of the D.A.D.1 analysis.

Table 3.1: D.A.D.1 analysis results.
Name
1.The
2.The
3.The
4.The
5.The
6.The

weight of borrowed capital in turnover

evolution of net global trading capital
profitability of the activity
financial profitability
productivity of invested capital
evolution of net debts

2011
0.075
65.613
0.036
0.091
8.069
0.199

2012
0.106
81.710
0.037
0.096
8.044
0.245

Year
2013
0.098
79.081
0.034
0.100
9.784
0.210

2014
0.120
81.329
0.031
0.100
8.892
0.261

2015
0.073
71.459
0.030
0.104
9.712
0.172

Analyzing the evolution of the financial results, the project group has assigned a mark N,
from 1 to 5, for every section of the financial analysis.
1. The weight of borrowed capital in turnover. Comparing 2011 to 2015, the ratio has
not changed substantially, but a important improvement can be seen in the evolution
of the annual turnover. During the period of 2012-2014, the value of the ratio has
risen significantly, a reason for this might be the companys decision to invest more
money in expanding its business. The sudden decrease from 2014 to 2015 in the
ratio can be related to the fact that the company has put a high value on paying its
debts. This thing can also be seen comparing the 2014-2015 (net profit)/(turnover)
ratio where the net profit evolution doesnt follow the annual turnover one. The
project group has assigned a mark N=4 due to the fact that the company hasnt
showed a negative outcome in the current ratio compared to the period when the
investment started and the result of the investment has lead to a higher turnover,
which in normal conditions means a higher profit.
34

N=

2
5
2
5
1
5

4
4
3
5
4
4

3.1. NCC Group Financial Analysis - D.A.D.1

Aalborg University

2. The evolution of net global trading capital. The evolution of net global trading
capital ratio shows a significant progress in 2015 compared to 2011. Even if compared
to the period of 2012-2014, year 2015 shows a lower ratio, the decreased result can also
be based on the companys decision to investment more money into debt payment,
raising the value of the Current Liabilities. Considering that the current ratio shows
a improved value, the project group has assigned a mark N=4 to this section of the
analysis.
3. The profitability of the activity. The ratio for the profitability of the activity shows
a decreasing trend from 2011 to 2015. Comparing 2015 to 2011, the self financing
capacity doesnt show significant difference even if the turnover has risen. The
evolution of the self financing capacity might have been affected by high values of
provisions and by the period of high indebtedness. Based on these facts, the project
group has assigned a mark N=3 to this section of the analysis.
4. The financial profitability. The financial profitability ratio shows very good evolution
through the years analyzed. Considering the fact that the gross profit has a relative
better evolution than the turnover and the turnover has risen significantly, this
shows that the company gained a better control of its processes and the amount of
unexpected loss has decreased. Based on these facts, the project group has assigned
a mark N=5 to this section of the analysis.
5. The productivity of invested capital. The ratio shows a significant improvement
through the years analyzed. It can be seen that the net fixed assets value does not
have a significant change comparing 2015 to 2011 while the turnover shows great
improvement, this shows that the company has optimized its resource management.
Based on this, the project group has assigned a mark N=4 to this section of the
analysis.
6. The evolution of net debts. Based on the same logic as in the first section of the
analysis and comparing 2015 to 2011, it can be seen that the capital earned on
short term has shown good progress, the net debt has also risen but compared to
the positive result in the capital earned, it is not so significant. Based on this, the
project group has assigned a mark N=4 to this section of the analysis.
The final mark for the financial analysis will be calculated as a weighted
average.

6
6
X
X
NDAD1 = (
Ki N i)/(
Ki)
1

NF inancial =

24+54+23+55+14+54
= 4.15
2+5+2+5+1+5

35

3. Analysis
Conclusion of the Financial Analysis.
NCC Group has scored a mark of 4.15 out of 5 in the D.A.D.1 Financial Analysis. Based on
the current financial status and the evolution in the past 5 years, the company is capable
of controlling its debts and will not be facing problems in applying for future loans. The
net profit is expected to grow due to the positive results in the annual turnover evolution
that in optimal condition will also continue to rise. The project group has concluded that
NCC Group has a strong financial power and is capable of investing investing capital in
expanding/optimizing its business in the Nordic countries.

3.2

NCC Contruction Denmark

3.2.1

External Analysis

PESTEL
1. Political
The Kingdom of Denmark is a constitutional monarchy led currently by Queen
Margrethe II. The executive power is led by the Cabinet government and the
legislative power is led by the Danish Parliament. Companies are affected by changes
in legislation and have to make changes of their own within the company to adapt
to the new legislation.

The last election for parliament took place in 18 Jun.

Table 3.2: Evolution of Parliament elections.

Year
2001
2005
2007
2011
2015

Liberals Party
31.2%
29%
26.2%
26.7%
19.5%

Social Democrats Party

29.1%
25.9%
25.5%
24.9%
26.3%

Danish Peoples Party

12%
13.3%
13.9%
12.3%
21.1%

2015 where there were 3 parties with significant results: Social Democrats(26.3%),
Danish Peoples Party(21.1%), Liberals(19.5%). Comparing this election to the past
four ones, it can be seen that the Liberal party has lost ground taking 3rd place
after being the leading legislative power for the period of 2001-2015. The Social
Democrats are a center-left winged party and promotes equality between people
by taking measures such as progressive taxation, wealth tax, mixed economy and
social security. If applied, the progressive taxation measure might affect the building
industry in two positive ways: a higher workforce and more demands in housing
development, however this measure might affect the shareholders of the company in
a financial way. The mixed economy measure might also have a good effect in the
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3.2. NCC Contruction Denmark

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building industry by creating public owned production bases and research facilities
that will set the material prices at a fair level and help the technology evolve. The
Danish system has a low level of corruption leading to fair tender competitions in
the Building Industry. Considering the political views of the leading parties, the
level of corruption will not rise significantly and its not a thing that the companies
must take into consideration in the near future. Due to the high contribution in
the European Union, Denmark is considered to have good relationships with most
of the European countries. The number of foreign people that come to Denmark are
still rising due to Denmarks appealing economy but some measures to reduce the
newcomers to a acceptable level might be taken in the near future.
The Social Welfare in Denmark is one of the best ones in the world, often referred to
as the Scandinavian welfare model because it assures equal right to social security
to all citizens. The health care is a remarkable by the fact that private citizens
insurance is provided bu the state itself, not by private insurance companies. The
education is provided for free for all Danish citizens and for EU citizens and it is
considered as a key priority.
Denmarks international trade policy allows more free trade on a global basis and it
is conducted in close co-operation with the other EU-countries. Denmark is among
the most active trade development and liberal friendly State in EU.

2. Economical
The krone is the official currency in Denmark even though the country is a member of
European Union. Denmark have negotiated an opt-out from joining the euro, unless
it is parliamentary voted or by referendum. In 2000 the attempt to adopt euro as
a national currency through the referendum was rejected by 52.3%. Denmark has
common borders with Germany, which is already using euro as a national currency,
and Sweden, who is obliged by the EU to adopt euro in the future. At the moment,
Swedens currency is SEK approximately 0.78DKK.
The economy of Denmark is very diverse being split between agriculture,
manufacturing, energy, transport, labor market. Following Norway and Britain,
Denmark is the third largest oil producer in the Western Europe. Oil and natural
gas are produces in enough quantities to cover domestic consumption and enough
gas to export to Sweden and Germany.
1

refreninta

37

3. Analysis

Figure 3.11: Gross Domestic Product for Denmark and Sweden

As it can be seen in the Figure 3.11, the GDPs for Denmark and Sweden in 2014
are aprox. $336 bilions and aprox. $578 bilions. Sweden is definitely more powerful
than Denmark from this point of view. Denmark has around only 58% of Swedens
population with a significantly smaller total area. Taking into consideration the
GDB, the population and the square meters for both countries, Denmark shows
up as a small country, but with a strong economy, almost equaling Sweden. NCC
Denmark is already representing 13% of NCC Group at the moment, which is a high
percentage due to the fact that NCC Sweden owns 47%.
According to

the construction business is a stable one in 2016. Although that in

2008 it suffered a severe crisis and, as the other business fields, it was bellow trend,
in 2010 it started to stabilize. By 2011 it was above trend, but the mid 2012 a new
decline fallowed. 2013 and 2014 were good years for the construction business, but
in 2015 the ascendant rhythm was accelerated and by April 2016, it can be seen the
good situation in which is the construction business, compared to manufacturing industries, services sector or retail trade. Also, the business cycles for the construction
sector were more stable that for the rest of sectors.
2

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Figure 3.12: Actual Economical Cycle

According to 3 the inflation rate in 2016 is 0.3%, registering a growth of 0.1 compared
to previous year. But for 2017 is expected to grow up to 1.5%. This will affect
negatively the construction market by the higher expenses with procurement.
It can be read in the Internal analysis that NCC Construction covers a wide area of
construction services, but in the construction market the competition is strong and
the climate is seasonal, so there are periods when there will be more projects ongoing
and periods with lower productivity. These factors can lead to overproduction or to
underproduction. The overproduction can appear in the cold or rainy season and
when the competition offers a better price for a project. As these risks are hard to
be predicted, the company can reach the point where they have to bid with a lower
prince only to win a tender, as the human resource and the equipment is a constant
resource that cost money and needs to be engaged in different activities. Also the
materials price can be influenced as the company need to continue its activity and
the storage cost is a significant one. The underproduction is a risk that appears rarely
when the company does not know to plan the resources, as they can be engaged in
too many projects in the same time.
It is known from the previous chapters that the unemployment rate in Denmark has
decreased in the last years turning into a boost for the countrys economy since it
relies significantly on the human resources. But, from another point of view, a lower
unemployment rate also leads to a smaller number of applicants for the recruiters,
with another education background than needed, all resulting in higher salary pay3

ref

39

3. Analysis
ments.
3. Social
According to Forbes 4 , Denmark is the happiest country in the world. The criteria
with high score were for a strong social support system, freedom to live as one please
and low perceived business and government corruption.
Denmark is a country that supports and welcomes immigrants whether they are
coming for work or studies. Regarding this subject, the Danish Immigration Service
made a report in 2012 stating that 54% of the applicants for the Danish residence
permit are immigrating under the EU rules of free moving, 19% are international
students, 8% are labor migrants with working permits.

Figure 3.13: Population of Denmark 2006-2014

It can be seen clearly from Figure 3.13 that the population in Denmark has increased
significantly over the past 10 years. Along with an increased population there are
being raised other demands. On one hand, the housing industry will grow especially
in big cities like Copenhagen and Aarhus, as well as in the cities that are smaller,
but host the big university centers like Odense or Alborg. On the other hand, more
people in Denmark also mean bigger public buildings or new ones, public spaces and
a higher level of traffic when it comes to public transportation.
The culture of the habitants of Denmark is a strong point regarding the public
demands. The foreigners established in Denmark come from Western European
countries and non-Western European Countries in 50-50%, so some of them might
have the culture, the mentality and the behavior close to the Danes, but for most
of them adaptability is a trait they will have to develop. For the labor market, this
aspect could be a very delicate one since all the companies hiring foreigners will have
to invest more in training them and making them understand and follow the Danish
values.
4

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Another aspect worth mentioning is that the Denmark does not have a regulation
that legally states the minimum wage, but it is more of an agreement between the
employer and the employee. In this case and not only, the risk of social dumping
may appear, but the government is trying to tighten the control on this situation
this by applying more strict rules and more fines.

41

3. Analysis
4. Technological
Analyzing the current research market, it can be seen that its rising from year to
year due to the needs that need to be fulfilled. Having the latest technology can
prove to be a huge advantage for a company on its selling market, a reason why most
successful companies have their own research facilities. Currently, in the Building
Industry, there are new or still in research technologies that show great potential for
the future, such as:
Building Information Modeling (B.I.M.). Even tough Building Information Modeling
is not a new concept, the past years has shown significant progress due to the
developing of new software that includes a large variety of tools that makes it easier
to use the information you have and eliminate human error. Even tough all developed
companies uses B.I.M., The large variety of software and human skills can lead to a
big difference between the companies performance in this area.

Figure 3.14: Building Information Modeling

Construction site survey drones. Recently, Drone technology has become a trend
due to the high number of utilities it can offer in a large variety of business
areas. The main idea behind the usage of drones is to eliminate human injury
and offer a more reliable information gathering based on live data transmission.
The utilities of drones can also be used in the building industry for constructionsite surveillance. The drones can offer real-time information based on images of a
construction building stage without the manager being present on the site, examine
details from a complicated angle for a human to reach, give the building owner a more
frequent presentation on the buildings evolution, give a perspective for the aesthetic
of the building seen from a aerial view and give the opportunity for a better data
storage.
3-D laser scanner in Construction industry. The 3-D laser scanner can be used to get
a real 3-D model associated to a variety of B.I.M. software. It is considered to be a
very fast way to build a B.I.M. model of a building that requires refurbishment or to
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compare the actual stage of the building to the previously made B.I.M. model. The
3-D laser can also detect erosion level, topographic view, a real time 3-D surveillance
of the site and the variety of utilities wil rise as the research continues.
3-D Concrete printing. At this stage, 3-D concrete printing shows remarkable results
in small housing construction, delivering small houses at record speeds. As time will
pass on the concrete 3-D printing might show positive results on construction sites
by lowering human labor, manipulation of heavy elements, number of element nodes,
time consumption and errors.
5. Legal
The most important characteristics of the Danish labor market is that most
employees (about 75 per cent) are members of a trade union, one example would
be the Danish Construction Association(Dansk Byggeri); the social partners play
the leading role in defining pay and working conditions on the labor market; pay
and working conditions are set in collective agreements, where one of the contracting
parties is a trade union representing the employees interests and the other is the
employer; cooperation in the standard and industrial disputes are governed by rules,
so the social partners must comply with the collective agreements terms; the right
to take industrial action as the trade unions may take take industrial action against
the employer, all these characteristics form the Danish Model.

The Danish Construction Association is one of the most important organizations

in the building industry, as comprises approximately 6000 Danish companies in the
building and infrastructure industries, counting around 70.000 employees. The role
is to support the companies focus on sustainability and good working conditions.

The construction companies involved in this association can influence the evolution
of the construction market through examples of good practice or research, or they
can influence the implementation of a new law to some extent.
From 1 Th of July 2013 the Danish Working Environment Agency are allowed to fine
companies working on the Denmarks territory without the need of documentation if
they are practicing social dumping. This is measure to fight against social dumping,
considering that this is a big problem especially in the construction filed, mainly in
Denmark because it is propitious for the immigrants. Although that this measure
has raised the attention of the construction companies and made them being more
careful with the employment process, this problem still exist in Denmark. In the last
few years, the DWEA has increased the precautions and control measures and has
started to increase also the level of the fines.
Although that NCC has reduced the accident rate with 50& from 2011, this subject
is still a concern for the company. This trend is followed by the most if the companies
5
6

referinta carte: Working in Denmark - a guide to the Danish labour market, 3 edition, May 2009
referinta

43

3. Analysis
from the construction field, especially because the penalties are becoming tougher.
The employers are responsible to provide a safety environment for the employee.
The responsible authority for the construction products are Danish Energy Agency
and Center for Building. The market surveillance targets two areas: reactive operations which receives information from citizens and enterprises that suspect the
sale, marketing or use of illegal construction products; and the proactive market
surveillance involves the Energy Agency which supervises different manufacturers,
importers and construction sites. The sanctions addressed by this authority can lead
to withdrawal or recall of tge construction product or possibly removal in cases where
the product was already built-in.
6. Environmental
The environmental regulations in Denmark are inspired from EU legislation and
to some extent from international treaties.

The main authority responsible for

drafting the environmental law and for administration of environmental policy is

the Ministry of the Environment, with three agencies under it: The Environmental
Protection Agency, The Danish Geodata Agency and the Danish Nature Agency.
The most important environmental low is the Environmental Protection Act(EPA.
It includes the main fundamental objectives, the means to meet the set goals and
the administrative principles for the good functioning of the agencies. As EPA is
decentralized, meaning that the municipalities administer and enforce most of the
legislation, with the aim that actions to be taken close to the people and industry
involved.

Figure 3.15: Climate changes up until 2050

Denmark is characterized by a temperate climate with mild winters and cool

summers. Due to its geographical position, Denmark has an average of 179 days
per year with precipitation and extreme weather events such as wind storms. The
position between a continent and an ocean means that weather often changes. The
future foreseen changes in climate are characterized by a raise in precipitation levels,
wind intensity and higher temperatures. Regarding the future climate changes, the
7

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building industry might suffer difficulties in their activity such as more time for
building execution, usage of higher volume of materials or higher quality ones and
a possible higher number of building accidents. The most common natural hazards
that can occur in Denmark are floods and powerful storms. Insignificant earthquakes
have been reported and the chances for a high scale one to occur are very low. The
possibility of a flood to occur will rise in the future due to the reported evolution in
of climate change.

45

3. Analysis
Building scenarios
The business environment is facing a high level of uncertainty due to rapid change or
complexity. Because of that, it is difficult to guess how the macro-environment will affect
the companys strategy. Based on key driver for change from the PESTLE analysis,
different scenarios can be built in order to have different images of how the business
environment will evolve in the future.
Some expert advise to built more than three scenarios, in order to dont fall into the trend
of optimistic, most likely and pessimistic. Usually, the middle point is the most common
for the managers to exploit. Due to this fact, the following scenarios will be built on 4
alternatives, from the most pessimistic to the most optimistic, with no middle point.
The scenario scope illustrates the subjects of the scenario which is for construction business
in Denmark and the time span is for the next decade.

The Key drivers for change

will be a combination between different factors from the PESTLE analysis which could
have an important impact upon the construction business. The key drivers give different
alternatives for the market evolution and based on these direction, the scenario "stories"
can be developed. It is important to identify also the impact of these factors, either is a
positive or negative one. The final step is to establish early warning systems based on the
scenarios, so the company can react faster and make an appropriate strategy.
Next, two key drivers that involve high uncertainty and independent of each other will be
highlighted, in order to create divergent scenarios.
The first scenario will be focused on two key drivers with a high potential impact. The
first one is a political factor: the progressive taxation. And the second key driver is a legal
one and it refers to the measures against social dumping.
The first one gives to extreme direction: a higher taxation or its inverse a lower taxation.
The second one offers a range between: a more tolerant system concerning the legal
measures applied in the construction field or a harshness in the legal measures.

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FIRST SCENARIO
High Taxes

Social
dumping

Lack of workforce
High salary
Intolerant
System

Tolerant
System
Stable
unemployment
rate

Qualified
workforce

Low Taxes

Figure 3.16: First scenario

As can be seen in 3.16 higher taxes perceived on the construction market and an intolerant
system against social dumping can easily lead to lack of work force in the construction
field and increased salary demands, as the construction companies will lack the financial
resources to fulfill their salary obligations. A permissible legal system towards social
dumping will lead to a ascending trend of it, considering that due to high taxes, companies
income will be lower. A stable unemployment rate can be obtained through a medium
tolerance and a low taxation level.
The second scenario is a combination between a social key driver as the increasing in the
number of immigrants and a economical one referring to the unemployment rate which
is decreasing for the last few years. The social key driver gives two extreme directions:
increasing number of immigrants and a dressing number of natives. The economical key
gives two alternatives: an increasing offer of workforce and the decreasing of it.

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3. Analysis
SECOND SCENARIO
Increased immigrants
number

High demand for

cheaper
accomodation

Increasing demand
for cheaper
accomodation
High
unemployment
rate

Low
unemployment
rate
Slow decreasing
in housing
demand

Low demand
for housing

Decreased natives
number

Figure 3.17: Second scenario

As can be seen in 3.17 an increase in the immigrants number, combined with a high
unemployment rate would probably lead to a higher demand of apartments because they
are cheaper.

On the other hand, the decreasing of the natives number and a high

unemployment rate can easily lead to low demand for housing.

A combination between a technological key driver and an economical one gives a third
scenario. Although that Denmark declined in to adopt EURO in 2000, in future the
situation could change because EU could make pressure towards member states in order to
obtain stability in the Union. The technological factor refers to the technological progress.
Although that in the last years, the investment in the research has grow in Denmark and
the internet makes the information exchange very easy, the country can be considered a
nationalist country. This could slow down the information exchange process with other
countries, which represents the unwanted direction, contrary to openness towards new
technology implementation.

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THIRD SCENARIO
Openness towards new technology

Technological
Exchange

Fast Technological
Exchange
Opened
Euro

Traditional
DKK

No Evolution

Decline/Regress

Closure towards new technology

Figure 3.18: Third Scenario

As can be see in 3.19 , the best scenario is the fast technological exchange and fast
implementation of new technology in a context where danish construction market is opened
toward new technology and a international currency will be adopted. These are two
factor that would facilitate the achievement of the optimistic scenario. The technological
exchange is possible still if the current currency is kept, but it will be a small barrier
on the international market. The worst scenario is when the close mentality of people
is combined with the more or less forced decision to adopt Euro as a national currency.
These two direction lead to regress of the construction market and decline of the economy.
Stagnation could appear in case that the current currency will be kept and the mentality
of people will be oriented towards closure and traditionalism.
The fourth scenario is build on a combination between an economical key driver and an
environmental one. As was mentioned in the PESTEL analysis, Denmark has a diversified
economy, with a strong accent on oil and natural gas exploitation and agriculture. But this
situation could change in the future, as the focus could be on developing more a branch of
the industry. The climate in Denmark can be characterized as unstable, with strong wind
storms and a high level of precipitations. Considering the last changes in the climate as
global warming, the climate in Denmark might suffer changes, taking the direction towards
higher temperatures and lower level of precipitations.

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3. Analysis
FOURTH SCENARIO
Specific Economy

Risky

More Competitive

Stable
Climate

Changing
Climate

Split Risk

More Independent

Diverse Economy

Figure 3.19: Fourth Scenario

As can be seen in ...., the best scenario is built on the combination between a more specific
economy and a stable climate, which gives a more competitive business on a national and
international level, meaning that the export would grow significantly. On the other hand,
a stable climate and a diversified economy means that the country is more independent,
the import level being low the country being able to self sustain. The worst scenario is a
risky one, being build on a specific economy and a changing climate. The risk would split
in case of a changing and unstable climate, but diversified economy.
The last scenario is a combination between social welfare, which is a political key driver
and EPA, an environmental key driver.

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FIFTH SCENARIO
Equal

Close Control

Objectivity

Centralized
EPA

Descentralized
EPA

Loss of control

Subjectivity

Privileged

Figure 3.20: Fifth Scenario

It was mentioned in Pestle Analysis that EPA is decentralized in order to be closer to the
problem and that the social welfare system in Denmark is one of the best in the world as
it ensures equal treatment to all citizens. Some people say that the Danish Social welfare
is good on the paper, but it is not so good implemented in practice because there are
some discrepancies. So if it would be to listen to these rumors, it can be said that it is
actually privileged.

EPA is decentralized, so the municipalities are responsible for the

environmental issues, but because Denmark is a small country, the central environmental
agency could be the one to supervise the environmental issues for the entire country, in
order to reduce the organizational costs and to be more focus on this issue.
The best scenario is build on a equal social welfare and a decentralized EPA because that
means satisfied people are more likely to comply with the regulations and the responsible
organizations are close enough to see the issues in case that they appear and they can take
quick actions against it. In case of a centralized EPA and equal treatment for all citizens,
people will comply with the regulations, but the measures taken by EPA will be considered
objective because each region has its specific problems. The subjectivity appears in case
of a decentralized EPA and privileged social welfare as some citizens will refuse to comply
with the environmental regulations as they are not satisfied with the social welfare system.
A total control loss can be estimated in case of a privileged social welfare system and
a decentralized EPA, as unhappy citizens will refuse to comply with the environmental
regulations as there is nobody to supervise them closely.
8

referinta

51

3. Analysis

Porters Five Forces

Threat of entry

- Expensive to enter the industry

- Long time to gain proof of experience.
- Long time to gain quality/price advantage.
- Long time to make the companys values known.
- Long time to gain supplier advantage.
- Expensive to gain technological advantage.

Level of Danger:
- Low
- Medium
- High

Suppliers bargaining power

- High number of suppliers in building materials.

- High number of suppliers for prefab. elements.
- High number of crane companies.
- Single European market.

Competitive rivalry

- Growing industry rate.

- Tender competition based on best price/
performance offer.
- 7 companies with the turnover >1 bio. DKK.

Buyers bargaining power

- High number of customers.

- 7 companies with the turnover >1 bio. DKK.
- Clients can choose the company based on
price/performance offers.

Threat of substitutes
- New materials with better quality/price.
- Automatized technology.
- Eco friendly standards.
- New management tools.

Figure 3.21: Porters Five Forces Analysis

1. Threat of Entry. To enter the construction industry, a high capital is needed due to
the large variety of expenses that need to be covered in order to be active on the
market. In general the a construction process is complex by nature and requires a lot
of resources from start to finish, some of the most important resources are: materials,
human labor, technology and research. From a financial point of view, a company
has to posses the capability of sustaining possible losses in the first years of activity
and must not expect short term profitability, this makes the entry on the construction a complicated matter. After entering the market there will be a long process of
experience gathering before the company can compete with the ones in the top in
terms of performance and gain proof for their capabilities. Gaining a name in the
industry and making your values recognized by customers is not a sudden thing and
a major deviation from your companys main idea can make years of progress mean
nothing. Another matter that a new company has to take into consideration before
entering a new market is that a good relationship between a supplier and its client
takes a long time to develop. The supplier-buyer relationship is very important into
gaining advantage over your competitors, a good relationship with your suppliers can
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lead to a better price negotiation and a better coordination, this can give a company
high advantages in a tender competition. Due to these facts, the project group has
decided that it will take a long period of time before NCC Denmark is affected by
the entry of a new company on the market but their progress should be recorded
until it becomes a potential threat. A low level of danger has been assigned to this
section of the analysis.
2. Threat of Substitutes. Like any other market, the construction industry is in a
continuous progress and is open to improvements. Every big company has its own
investment in research and sees it as a need for not falling behind from other companies in term of technology and innovation. The investment into research can lead
to several advantages for a company such as: new materials with a better quality
price ratio, automatized technology that can lower human labor and offer a better
performance while keeping a safe work environment and new management tools that
can optimize the entire process better than the actual ones. The use of Eco friendly
standards are becoming frequent as time goes by and customers are more and more
concerned about energy efficient living environments, holding a good knowledge in
this area can offer a great advantage to a company. The project group has considered
that NCC Denmark should keep a close eye on the research market and try to adapt
new technologies/materials that show potential before its competitors or to develop
new ones through its own research. A high level of danger has been assigned to this
section of the analysis.
3. Suppliers bargaining power. The current market holds a high number of suppliers
for most of the important resources needed in the construction process, in general
this situation generates high competition between suppliers that can lead to certain
advantages for a construction company, such as: high bargaining power, competition
for better quality and the wish of the suppliers to create a strong bond with buyers.
Considering the current situation, NCC Denmark is not affected in a negative way by
the current supplier market. A low level of danger has been assigned to this section
of the analysis.
4. Buyers bargaining power. The buyers bargaining power can be at a different level
depending on the way that a construction company is chosen to do a project. For
projects based on a tender competition, the company with the best offer is chosen as
the ones the client work with, in this case the bargaining power of the buyer is low
due to the fact that he cannot influence the final price directly. For projects based on
direct selection, the price of the project is based on a direct agreement between the
client and the company, in this situation the buyers bargaining power is high due to
the fact that he can influence the final price. Considering the current raising market,
a construction company will not accept the buyers decision to lower a projects price
53

3. Analysis
under a level that might affect its desired operating profit, but will accept certain
price negotiations for the well being of both parties. Considering these facts, NCC
Denmark must monitor the level of bargain acceptance of its close competitors and
adjust it to their own situation. A medium level of danger has been assigned to this
section of the analysis.
5. Competitive rivalry. The construction industry has a very competitive market due
to the fact that the public/private tenders are defined as a competition between invited/qualified companies to come with the best offer to the clients requirements.
Currently on the danish construction market there are 7 companies exceeding a annual turnover of 1 billion DKK, including NCC Denmark. The last year has shown
a rising turnover for a high number of the companies in the Danish construction
industry, this shows that the industry is improving and the competitive level will not
have any drastic changes. Considering these facts, NCC Denmark is considered to
have a good position in the competitive market with not so many companies that
can compete at the same level with it. A medium level of danger has been assigned
to this section of the analysis.

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Internal Analysis

Economical performance
Table 3.3: asdf
DKK (mio.)
Orders received
Net Sales
Operating Profit
EBIT

2011
3.043
2.770
139
5.0%

2012
2.809
2.902
161
5.6%

2013
4.249
3.057
179
5.9%

2014
4.579
3.549
231
6.5%

2015
3.628
4.133
257
6.2%

NCC is one of the largest construction companies in Denmark, as it occupies a strong

market position. Orders received by NCC Construction Denmark amounted to DKK(mio)
3.628 in 2015, an improvement if compared with 2011, but a decline if compared with
2014. It did not followed the same trend as the general construction market in Denmark.
As 2015 was estimated to be a growing year for the construction market and NCC has
registered a decline of more than 20 percent in order received. This can be because of the
companys policy to dont take projects with a high degree of risk, which means that big
projects with a high possibility of profit were excluded as its complexity makes it harder
to be controlled.
Higher net sales and continued healthy profitability resulted in improved earnings. The
net sales have increased with 159 percent in the last four years, which is a promising
for NCCs activity. Good practice resulted in doubling profit in the last four years. A
augmentation in profit can lead to new investment and more value for the shareholders. It
can be notice dis-proportionality between order received and operating profit, as the first
one has a tendency to decrease in the last year, but still keeping the ascendant trend for
the second one. This can be due to the fact that company invested in projects with a high
rate of success and had succeed to optimize the cost in order to obtain the desired profit.
An ascending trend can be notice in EBIT, as it augmented for the last years, with a slight
drop in 2015. EBIT is an indicator of the companys profitability. From table

can be

seen that the companys profitability is in a good track, although that the decline of 0.3
percent in the last year can be due to a lower level of order received. As can be seen in
table, the EBIT is directly proportional with the order received.
In Denmark, growth was primarily noted in the metropolitan regions of Copenhagen and
Aarhus, due to increasing number of population caused by the high number of immigrants
and increasing number of international students.
9

referinta la tabel

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3. Analysis

NCC Construction Denmark Business Model

The Business Model Canvas was included in the Internal Analysis in order to have a
strategic view upon the company.

56

Research

BREEAM

9 Cost Structure

Social Media

Technology

Payments from Provided Services

Figure 3.22: NCCs Business Model

Materials/Equipment

5 Revenue Streams

Conferences

Engineering

IT

Web-Site

Raw Materials &

Concrete Elements

Personal Assistance

Private Sector

Direct Cooperation

3 Channels

Performance

Consultancy/Optimal

Public Sector

2 Customer
Segments

Indirect Cooperation

6 Key Resources

Sustainable
Solutions

Risk Management

BREEAM

Risk Reduction

1 Value Proposition 4 Customer

Relationships

Research

7 Key Activities

Universities/Students

8 Key Partners

NCC Construction Business Model.

3.2. NCC Contruction Denmark

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3. Analysis
1. Value Proposition.
As can be seen in ..., the value propositions for customers are the risk reduction,
sustainable solutions and performance. The risk management is a important issue
for NCC, as they try to minimize the possible risk as much as possible. For a better
risk management, the company has made a separate department for legal and risk
management.

10

The company also offers sustainable solutions in terms of social, environment and
economy, all three domain should interact in a clear and comprehensive manner.
2

With a strong history in the building industry, the company is well known in

the Nordic construction market for their performance, being a reliable company in
delivering the best services and products in terms of price-quality ratio.
2. Customer Segments.
The company has a segmented market. In .... can be seen that NCC Construction
Danmark has targeted public and private customers, meaning different customer
segments. For the company it is not feasible to go alter all types of customers
because different customers have different needs, demands and problems.
As the company offers sustainable solutions, at a high quality, their target are
customers with financial possibilities. For each market segment, the company offers
different solutions. The public market is an important customer for the company
because the estate has invested a lot in new buildings or in renovation. One large
project where NCC Construction Danmark is contractor is the Esbjerg hospital,
where the public client is the Region of Southern Denmark and user being the Esbjerg
Hospital. The private market market is split in two: individuals and companies. The
individuals are all people that have financial possibilities to build a house. A major
private project where NCC Construction Danmark is a contract is the Carlsberg City
developed by City Development Carlsberg Byen P/S with a contruction cost of 1.310
billion kr.

3. Channels.
The channels used by the company to reach their customers are: web-site, different
conferences and Social Media.

Their web-site is friendly user, offering much

information for the customer and offers the possibility to contact directly the
company. NCC participated to different conferences where their value is recognized
through different awards. One example is that the company is recognized as being
the first construction company in the Nordic region to build a BREEAM Excellent
building.

As most of the companies, NCC is using social media as a marketing tool to spread
their image, in order to reach new customers. An important marketing instrument
10

organigrama de pe site
referinta la sustainability de pe site-ul lor
3
referinta de pe site-ul loc uc proiectul
4
referinta la site-ul lor
2

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are the articles about the companys awards or projects in the specialty literature.
4. Customer Relationships.
The relationship between NCC and its client depends on the type of agreement applied between the 2 parties. Currently NCC can be hired under the form of: Sub
Contractor, Main Contractor and Turnkey Contractor.
In the case of NCC being hired as a Sub Contractor, the relationship between the
company and the client is a indirect one, the Main Contractor being the entity that
transmits information between the two parties. In this situation NCC will hold liabilities to the Main Contractor in the same terms as the Main Contractor hols to
the client.
In the case of NCC being hired as a Main Contractor, the relationship between the
company and the client is a direct one, the company will hold liabilities to the client
and the exchange of information will be direct between the two parties.
In the case of NCC being hired as a Turnkey Contractor, the company will be responsible for managing the project as the clients representative and will offer personal
assistance for the client in every stage of the project. In this situation NCC is the
entity responsible for the exchange of information between the Contractor and the
client.
5. Revenue Streams.
The main revenue stream for NCC comes from the provided services in the building
industry and it depends on the volume of the projects that the company is involved
in. Depending on the type of service provided by the company, the most profitable
works for the company are the ones that use resources from their internal providers.
Some of the important services based on the internal resources of the company are:

In-situ concrete execution.

Design, Execution and Renovation for the structural casing of the building.
Design, Execution and Renovation for the installations of the buildiing.
Organization of the construction site.

6. Key Activity Resources.

NCC currently can offer technical service in the important areas of a building project,
a high engineering power must have been present in order to develop the company
to this stage. Based on this fact, and on the fact that the companys evolution is
rising, a high number of trained engineers and workers are present in the company.
The execution of a building is a complex process and requires a high variety of resources in order to get the final product. Some of the most important resources used
in the construction process are raw materials, installation materials, cement, water
and prefabricated concrete elements. The company currently can provide a part of
the resources needed in their activity from its internal suppliers, resources such as
sand, gravel, draining materials, mortar sand, granite and different types of concrete.
Based on the list of services that NCC can offer, the company has developed its tech59

3. Analysis
nology over the years and currently can offer a variety of solutions for the client from
their own internal resources. The company can currently offer high quality service
for most of the important stages of a building execution and design,services such
as: electrical and sanitary installations, fire safety solutions, organization of building
site, energy efficiency and design/execution/renovation for the structural casing of
the building.
Considering the companys IT resources, NCC has trained employees in using a variety of software. Over the years, the company has implemented different software
in their work in order to optimize the quality of their work. Some of the software
currently used by the company are: Mistra, Strusoft 3D Structure, Winbeam, Excel
based programs, Tekla Structure 3D and AutoCad BIM 2D.
One of the most important resource used to support the building process is the fuel.
Although that NCC Roads is more dependent of fuel consumption, this resource is
vital also for NCC Building for the machinery and equipments good functioning.
Although that NCC promotes a lower dependence on fossil fuel by using different
method of alternative sources, fuel procurement is still an important activity for the
company.
7. Key activities.
In order to make a business work efficiently, each company is developing certain
activities depending on the industry they are active in. Regarding NCC Denmark,
there are three big activities plus their sub-activities that are helping the entire
business to keep on going.

The department of Legal and Risk Management is

conducting research activities in order to reduce the risks that already exists or
may appear. Their role is to identify risks and prioritize them as well as coming
up with a proper strategy including the motivation of all employees to follow it.
The relationship between the company and its customers is very important to NCC.
One of the companys values is the confidence offered through the high standards
of quality, ethics and sustainability. This is another key activity for NCC which is
present inside the Customer Relations Department. The company offers services in a
matter of advising or consultancy prior and along the projects. From another point
of view, optimal solutions can keep any business to work. NCC Company is aware
of the fact that any equipment present on the construction site has to be 100% fully
used in order not to lose money or time. This is one of their focuses when it comes
to optimizing the activities on a site.
8. Key Partners.
To every company some of its partners have a significant role in increasing the
success or efficiency. For example, NCC is relying on companies to attract students
for research activities. One of their announcements from 2014 states that they are
looking for students to conduct research activities on a specific area. The universities
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are providing people that are ambitious, enthusiastic and willing to work hard in order
to achieve their goal. BREEAM in a few words is the worlds leading sustainability
assessment method for masterplanning projects, infrastructure and buildings. NCC
has recently started to get BREEAM certificates as a consequence of their sustainable
efforts. Through the BREEAM certifications, the company can actually prove to the
customers that their projects meet the proper standards. Furthermore, following
the BREEAMs codes for a sustainable envirnment, costly mistakes are avoided and
major risks are reduced, but worth mentioning is also the good reputation it provides.
9. Cost structure.
As it is already mentioned before, in order to get BREEAM certifications, there
is a need of a big financial investment. For a short time period, this investment
does not bring any financial benefits. It is true that BREEAM codes are expensive
to follow and they are entirely facultative, but if they are looked at from a long
time economy perspective, then the financial advantages can be seen, as well as
other benefic aspects like sustainability, reputation and reduced amount of mistakes
done. In the same situation with BREEAM is the research part. It is costly for
a construction company to keep the research activities prosper and ongoing. It is
a must to have very qualified people to work on, a lot of resources from which the
company will not get any financial benefits since they are only for trials, and of
course a lot of time. All these cost significantly, but research is sometimes the part
that keeps the company alive. Even if it may take longer, when the research has
results it can bring up innovative solutions which will not only upgrade the current
knowledge, but it will bring financial benefits. In the construction industry, it is
known that the investment made in a project is extremely significant compared to
the profit of the project itself. Just to not be misunderstood, the profit individually is
higher than most of other industries. This is happening because of the high quantities
of materials needed for a construction and the rental of the equipment. On one side,
the materials are not so expensive, but the quantity needed makes a big amount of
money. On the other side, how much equipment is needed depends on the size of the
project. Usually, there is not such a high request compared with the materials, but
they are very expensive to rent and unfortunately they are not always used 100% of
the renting time.

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3. Analysis

NCC Construction Strategic Capabilities

Strategic Capabilities
=
Threshold Capabilities + Distinctive Capabilities

Competitive
Advantages

Dynamic
Capabilities

Operational Capabilities

Resources and Competences

Figure 3.23: NCC Construction Strategic Capabilities

1. Resources, Competences and Operational Capabilities.

NCC Construction Denmark currently posses a high number of resources and
competences that covers the most important areas of a construction project. Being
able to make the work in the vital stages of a project using its internal departments
will ensure that the processes is according to the companys methods, therefore
there is a higher chance of avoiding errors that are more certain to happen when
different companies must work together. Some of the most important resources and
competences that form NCCs Operational Capabilities can be seen in table. 3.4.

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Table 3.4: NCCs Resources and Competences

Resources

Resource Type

Raw Materials

IT System
Physical
Concrete

Bentonite
Company Headquarters

Balance Sheet
Financial

Supplier of Funds
Construction-site Services.

Technological Installations.

Technological
Refurbishment

Building

Contracts

Legal

Competence
-Provision of a large variety mineral agregates
from internal suppliers.
-Ability of ataining raw materials from external
suppliers.
-High-End computers equiped with softwares
used for: Management, Structural Engineering,
Design, Database and Accounting.
-Provision of the most common used resistance
classes of concrete for environmental classes
starting from passive class to extra agressive class.
-Ability to attain special types of concrete
depending on the projects characteristics.
-Execution of in-situ concrete elements
-Provision of bentonite through the companys strong
relationship with Dantonit A/S
-Headquarters spread strategicaly all over the
country to keep construction-sites under a good
control.
-Ability of getting high loans in case of big
projects due to the improving results from year
to year.
-Ability of gaining financial trust from suppliers.
-Ability of backing-up its financial capabilities
in tender competitions.
-Posibility of ataining extra funds from the main
company in case of need.
-Equipment provision and instalation service with
certified inspection.
-Design and execution for Electrical Installations,
Sanitary installations, Anti-fire installations with IT systems,
Ventilation, Sewerage and cooling systems.
-Expertise in all the mentioned above.
-Energy efficiency optimization service.
-Design and execution for Solar Power Based
technological installations.
-Refurbishment for Public institutions and Private
buildings.
-Design and execution for cocnrete steel and wooden
structures.
-Design and execution for Public and Private buildings.
-Energy efficiency optimization service.
-Design and execution for retaining walls.
-Design and execution for pile foundation systems.
-Decontamination of Soil pollution.
-Ability to work under all forms of contracts.

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3. Analysis
2. Dynamic capabilities
The capabilities to be effective in time, they need to change and satisfy the new
market requirements. Dynamic capabilities are oriented towards the strategic change.
NCCs is one of the leading construction companies in the Nordic countries because
they knew how to adapt to the market changes and saw in time the threats and
turned them into opportunities.
NCC Building Danmark has a Strategy, Business Development, Public Affairs and
Sustainability Department, lead by Palle Bjerre Rasmussen. They make the market
research, see the new opportunities in new trends and decide the new strategy.

11

The company sensed the opportunity to reduce risk exposure and to increase
profitability through a new tool during design and construction and they seized
this opportunity and decided to implement VDC(Visual Design and Construction).
Through improvement and transforming, now they are a leading company in this
domain. Another dynamic capability assessed by the company is total digitization
which is a tool to increase the efficiency.
In a interview for "Strategy+business", Davis Teece explains that the companies
must adapt as the business niche changes constantly, this is one of the key factor for
a long-term survival of the company.

12

In order to satisfy the market requirement, NCC Construction Danmark has invested
in research.

They saw the opportunity to lower their cost and to reduce the

environmental impact in the same time, thereby they implemented a system to

turn the waste into new materials through sustainable and environmentally friendly
processing operations. The goal is to recycle 100 percent their waste, so they are
reaserching new technologies to do so. By this they save energy and reduce the
dependence of natural resources. To be close to their customers and to reduce the
environmental impact of the transportation, NCC cooperate with internal suppliers
for row materials for their projects.

13

By using partnering, they come early in the process and, together with their
customers and consultants, they find the best solutions within budget. The success
of the project is obtained through different key elements, such as: early involvement
of contractors, openness, workshops, shared responsibility for the projects design
and content, joint control and procurement and joint project office. As this concept
is very important for the company, NCC Construction Danmark has completed more
than 200 construction projects in partnering.

11

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12

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3. NCCs Strategic Capabilities.

The Strategic Capabilities of a company are defined as the capabilities needed to
compete on the market and the capabilities that differentiate the company from its
competitors. Figure.3.24 shows a comparison between NCC and its close competitors on the market in term of competences. The project group has decided on using
12 competences that might prove to be in NCCs advantage. The information used
in the figure is based on the data found on the web-site of each company, there is
a possibility that the companies deliver other services than the ones posted in case
the client demands it.
-Yes
-No
Competence
Company Name.
#1 #2 #3 #4 #5 #6 #7 #8 #9 #10 #11 #12
MT Hjgaard
NCC Construction Danmark
Enemrke & Petersen
Homann
Zblin
CASA
#1 Internal Suppliers for Mineral Agregates
#2 Internal Suppliers for Concrete
#3 Execution for In-Situ Concrete
#4 Execution for Pile Foundation Systems
#5 Soil Decontamination
#6 Design, Execution and Expertise for all installation types based on internal departments
#7 Design and Execution for retaining walls
#8 Energy Optimization Service.
#9 Refurbishment for Publilc/Private sector
#10 Construction-Site Organization Service
#11 Posibility of attaining extra funds from external sources.
#12 All types of Contracts used.

Figure 3.24: Comparison of competences between the top companies.

Considering NCC is placed in the top companies of the danish construction industry
in terms of turnover, the company must posses a number of capabilities in order to
compete on the top level of the market, these capabilities are defined as Threshold
Capabilities. In order to sustain an advantage on the market, NCC must posses
capabilities that are not common and will provide the company with a advantage in
a certain area of a project, these capabilities are defined as Distinctive Capabilities.
In order to categorize the 12 chosen competences into Distinctive or Threshold
capabilities, the project group as decided to use a scaling method. The numbers used
in the method refer to the number of companies that posses the same competence as
NCC, competences that are found between 0 and 2 will be considered as Distinctive
Capabilities while the ones that are between 3 and 5 will be considered as Threshold
Capabilities. the results of the scaling method can be observed in figure.3.24.

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3. Analysis
Distinctive Threshold

0 1 2 3 4 5

#1
#2
#3
#4
#5
#6
#7
#8
#9
#10
#11
#12

Internal Suppliers for Mineral Agregates

Internal Suppliers for Concrete
Execution for In-Situ Concrete
Execution for Pile Foundation Systems
Soil Decontamination
Design, Execution and Expertise for all installation types based on internal departments
Design and Execution for retaining walls
Energy Optimization Service.
Refurbishment for Publilc/Private sector
Construction-Site Organization Service
Posibility of attaining extra funds from external sources.
All types of Contracts used.

Figure 3.25: Distinctive/Threshold Capabilities

It can be seen that NCC posses a number of capabilities that not all its competitors
do, these capabilities might generate Competitive Advantage depending on the way
the company handles them.
4. Competitive Advantages.
Based on NCCs Strategic Capabilities, the project group has decided on a set of
items that the company can use to gain advantage on the construction market, these
will be defined as Competitive Advantages.
In-situ concrete based services.
NCC is capable of executing in-situ concrete, a process that few of its direct
competitors are offering service for. Combined with the companys ability to
supply itself with concrete from a internal supplier, the process will prove to be
more optimal than in the case of working with concrete provided from exterior
sources.Due to these facts, some of the advantages that the company posses in
the in-situ concrete services are:
Better information processing. The information exchanged between the
parties will be based on the same style, therefore the information will be
processed faster and misunderstandings will appear less often.
Adaptability to clients needs. In special cases, when there is need for
concrete outside of NCCs standard types, all parties involved will be able
to work directly into offering a solution from producing the new type of
concrete to executing it.
Better price offer. The company can use this opportunity to gain price
advantages when competing in tender competitions.
Provision of raw materials. Currently, NCC has three internal suppliers for raw
materials based on mineral aggregates. The positioning of the production bases
can offer NCC a good advantage when it comes to transport distances and the
variety of the aggregates produced can cover a large portion of raw materials
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needed in a project. Overall, the company can use this opportunity to gain
price advantage and a faster process when assigned to a project.
Piling foundation services. Even if the piling foundation services has not been
categorized as a distinctive capability for NCC, the companys strong relationship with Dantonit A/S, an independent business in NCC Group and the only
bentonite provider in the Scandinavian region, offers NCC a high advantage
when it comes to executing in-situ foundation piles into low stability ground
due to the materials property to work as a water barrier and as a support for
the drilled hole until the pile is executed.
Soil decontamination service. NCC is one of the few top companies that offer soil decontamination service, even tough there are companies specialized on
this matter only, having its own department department handling this issue
will speed up the overall design process of the building due to a faster final
solution that adapt to the final properties of the foundation ground.
Building installation services. Currently, the company has departments that
can handle all the commonly used types of technical installations that a building needs. When it comes to executing a new building or optimizing a old one,
working with different contractors for different types of works might prove to be
difficult. Having all the work based on your internal departments will lead to
less conflicts, a better coordination of the teams and a more familiar exchange
of information between the parties, this will lead to a overall better quality and
a more efficient process.
Construction-site organization services. NCC currently offers high quality full
solutions when it comes to construction-site organization. By doing this, NCC
can build good relationships with other companies and also make them aware
of all the services the company provides. The company also gains the chance
to market itself by being involved in more projects and show the companys
capabilities to the public due to the fact that the construction-site organization
is the first stage that defines the relationship with the surrounding environment.
NCC Denmark as a member of NCC Group. Being the member of a large group,
the company can gain financial advantage over its competitors in case of very
expensive projects, this will lower the competition and give NCC a high chance
of being chosen to work in the project.

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3. Analysis

3.2.3

SWOT and TOWS Analysis

SWOT Analysis.
The focus is moving now on the SWOT analysis, which is due to offer a wide perspective
on the company in a matter of internal (Strengths and Weaknesses) and external factors
(Opportunities and Threats). All gathered are meant to describe the companys inside and
surrounding environment in order to emphasize on what should be explored and improved
and what should be avoided or diminish its effect.
STRENGTHS

WEAKNESSES

Covers a wide area of construction services.

Dependency on NCC Group.

Anti-corruption policy & values.

Fuel dependent activities.

Strong experience and financial background.

Foreign labor dependency.

Usage of BREEAM and DGNB.

Equipment maintainance and storage.

Risk-Management.

High accidents rate.

Strong relationship with Dantonit A/S.

Lack of own research departments.

OPPORTUNITIES

THREATS

Increasing population & economy.

Substitutes & competitive market.

Increasing of annual precipitation rate.

Overproduction.

Evolution of technology.

Improper use of Risk-Management.

Gain of certifications.

Oscilation of the fuel price.

Expanding the areas of services provided.

Changes in legislation.

Activity in big associations.

Low unemployment rate.

Changes in climate.
Political changes.

Figure 3.26: NCC SWOT Analysis

Based on the internal factors of the company, the project group has identified a set of
strengths and weaknesses that NCC currently possess.
Strengths.
The company covers a wide area of construction services. The profile of NCCs provided
services shows that the company is capable of using its internal departments in most of
the important areas of a project, this strengthens the companys ability to work with every
type of contract.
The companys values and anti-corruption policy. The company ensures that all the work
provided is according to the current legislation and the agreements made with the client,
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this gives the company a good reputation and credibility when it comes to quality assurance.
A strong experience and financial background. The company has a good history when it
comes to the provided services, most of the services are backed up by years of experience
and has shown continuous progress over the years, backed-up by the companys strong
financial performance, the company can say with confidence that they are one of the best
in what they offer.
Bream and DGNB certificates. The usage of environmental friendly certificates offers NCC
a good set of advantages such as: lower accidents rate, better quality with less errors and
a better overall impact over the environment for the final product. Using these standards
might also generate extra costs in projects but in long term it will prove to be advantageous.
Risk-Management. The company puts a high accent on risk-management, working handin-hand with the rest of the departments, the overall strategy of the company will have a
more realistic view with less unforeseen events that might affect the future performance of
the company.
Strong relationship with Dantonit A/S. Considering the fact that NCC Denmark and Dantonit A/S are both members of NCC Group, the company holds a strong position when it
comes to executing deep foundations.
Weaknesses.
Dependency on NCC Group. Depending on value and the area where NCC Denmark
wants to engage a project, an approval from NCC Group might be needed, for example
in Sjlland NCC can everything on its own as long as the value of the project does not
exceed 204 million DKK while in Jutland the limit is 80 million DKK.
This has been considered a weakness due to the fact NCC Denmark cannot start the
preparations for the project until getting the approval. Another reason why the project
group has considered the dependency as a weakness is the time used to communicate NCC
Denmarks point of view and the risk for the two parties having a complete different point
of view.
Fuel dependent activities. The fuel dependency of NCC can be found in a large number
of services that the company provides, some of the activities that prove to have a high
dependency on fuel are transport, usage of site equipment and production.
Foreign labor dependency. Working with foreign labor power might prove to be difficult
for the company due to different problems that might occur. Some of the most important
problems that can happen are miscommunication due to language barriers, site accidents
and improper work-style, these problems will affect the overall quality of a project and
might also lower the reputation of the company.
Equipment maintenance and storage. Holding a large number of equipment might prove
difficult into using them efficiently. Even if an equipment is used or not, it still requires
periodical maintenance and a storage area, overall this might generate high costs that
could be avoided.
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3. Analysis
High accidents rate. Currently, the company has a high focus on avoiding work accidents
to happen. Even if the accidents rate is on a decreasing state, it is still high and could
affect the companys ability to gain projects.
Lack of own research departments. At the moment, NCC conducts research in association
with other companies or with universities. Not having its own research department might
affect the companys ability to create new distinctive capabilities.
Based on the external factors of the company, the project group has identified a set of
opportunities and threats that NCC currently possess.
Opportinities.
Increasing Denmarks population and economy. Along with more inhabitants and a prosper economy comes the need to invest, the need to create more indoor and outdoor spaces
for the population. For a construction company, this is an open door towards new projects.
Increasing of annual precipitation rate. NCC Denmark has already a well-established position in the deep foundations domain. Their collaboration with Dantonit A/S is a helping
factor through this type of projects. The fact that the annual precipitation rate will increase in the next years will lead to a higher level of groundwater. In terms of business,
this creates opportunities for the company to develop this area of activity.
Evolution of technology. Technology is a good partner as long as the company can keep
up with it. It is the tool that can help research activities reach farther and construction
activities move faster. Certificates. NCC Denmark is already using BREEAM codes in
their projects, but any other kind of certifications will strengthen the companys values,
position in the market and reputation, and will also add touch of innovation and improvements to their projects.
Expanding the area of services provided. Denmark is under a continuous development
and it is open to innovation and improvements. Expanding the area of activities, NCC
Denmark does not only have a smooth way under these conditions, but it can also benefit
the company financially.
Activity in big associations. In order to be part of the big changes around them, the
company must get involved in some of the associations related to its type of activities.
The winnings are: good relationships with the other members, new relationships and new
opportunities to grow or develop.
Threats.
Substitutes and competitive market. The competing companies can represent a major risk
for NCC Denmark. Some of them have a few similar activities with those of NCC and
the danger of being replaced with them by the customers is rising if there is not enough
control over the situation.
Overproduction. Overproduction is a threat that most of the companies may face at some
point. It is a loss in a matter of money, time and labour resources as well as storing or
handling. Improper use of Risk Management. It applies maybe not only to Risk Management, but the idea here is that the Risk Management department does not have to be the
only solution to rely on in case of major risks, but at the same time it has to be fully used
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for the basic solutions.

Oscillation of the fuel price. A construction company has a high dependency on fuel. At
the moment, most of the equipment runs with fuel and there is no cheaper alternative, its
price may destabilize the business from time to time.
Low unemployment rate. The negative effect of a low unemployment rate is that the number of people without a job and willing to work is very low, so the payment claims are
higher and the background of the potential workers may not be a suitable one.
Climate changes. The changes in the climate can affect the construction activities by creating delays in the schedule.
Political changes. As it is stated in the interview, NCC Denmark is getting a part of
its labour work from foreign countries. Any external political changes in other countries
which may affect foreign employees to work abroad is a threat for the company.

TOWS matrix.
Furthermore in the chapter, TOWS matrix is being built. Two by two of the SWOT factors
are being combined in order to identify the best case (SO) and the worst one (WT) as well
as those in between (WO, ST), but also bringing up some solutions.

THREATS (T)

OPPORTUNITIES (O)

STRENGTHS (S)

WEAKNESSES (W)

- Expand efficiency among employees.

- Partnership with Dantonit A/S on deep foundation research.
- 100% percent usage of available equipment.
- Conduct research for potential new activities.
-Analyze which new certificates may be beneficial.

- New technology that replace human labor.

- Certifications which provides a safe work environment.
- Alternative fuel based equipments.
- Colaborate with other members of the association regarding research.

- Identify potential substitutes and start a

partnership with the developers.
- Avoid overproduction through risk-management.
- Partnership with fuel providers.

- Equipment rental.
- Partnership in research with competing
companies.
- Provide more trainings regarding difficult
work conditions.

Figure 3.27: TOWS Matrix.

The matrix is meant to ensure that the right activities are implemented in the company
in order to get the best outcome for the business. In this case, the opportunities are the
ones that need to be fructified and the threats to be avoided. At the same time, from the
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internal point of view, strengths are to be used to make the best use of the opportunities
and the weaknesses of the company are to be diminished or eradicated.

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Problem Definition

In this chapter a problem formulation will be made, based on the internal and external
analysis from the previous chapter. The summary of the internal analysis can be seen
in the Strengths and Weaknesses from the SWOT analysis and for the external analysis
it was summarized in Opportunities and Threats. The study group has concluded that
the companys strong point stands in the wide area of construction service, the different
resource they owe and the different certificates, as BREEAM and DGNB that make the
company a reliable service provider. The strong relation with Dantonit A/S represents a
strong advantage over the competition. The company still has to work on the measures
against workplace accidents and foreign labor dependency. The dependency of NCC Group
is a limitation for a quick decision making, but it also can be seen as a opportunity to
some extent. As opportunities, the study group has identified a possibility of expansion of
the provided services, as the precipitation level is estimated to grow and new technology
can be implemented. The competitions and substitutes, also the changes in legislation can
limit the companys activity.
Based on the facts previous mentioned, the study group has identified some focus areas
where the company must improve its strategy:

1. dependency of partners
2. dependency of NCC Group
3. cooperation with NCC Group
4. exploitation of its capabilities
This being said, a problem formulation can be made:
How to limit the dependencies and expand capabilities in order to obtain a
better operating profit?

4.1

Delimitation

As the project is about NCC Construction Danmark, the problem formulation can be
formulated from a more general perspective, as in different parts of the country , NCC

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4. Problem Definition
acts differently, being more focused on different activities or having different priorities.1

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ma mai gandesc la ceea ce am zis aici :)))

Solutions

5.1

Mission, Vision and Values

Mission A mission statement is a constant reminder to its employees of why the company
exists and what the founders envisioned when the first bricks were laid. The mission
provides the framework and context helping the strategy and goals formulation. The
companys mission evolves over time in the same rhythm with the companys evolution.
1

The mission statement should be short as it should resonate with both employees and

external stakeholders. A strong mission statement should be able to build the brand and
affect public perception of the company, but also it should give to the employees something
to reach for, as it should be inspirational.
A mission statement is made in time as it involves a lot of decision-making. Prior to the
mission statement, a strong set of values should be already defined.
NCCs mission is to be a reliable service provider, offering sustainable and innovative
solutions in the building process. It is important for the company to be perceived as a
reliable service provider by its potential customers, results in more openness from customers
towards the company. Sustainability covers three areas: economical, environmental and
social; generates great value for shareholders, work in harmony with the environment and
contributes to the development of the society. Innovation requires that the company to
be one step ahead of actual trends and to influence the construction market through new
ideas and to set new trends.
Values Values are what support the vision and shape the companys culture and they
are essential in the decision-making process because a decision is made according to the
core values. Strong values known by the customers and partners represent a competitive
advantage because the clients know clearly what the company is and what it offers. Strong
values help the company to recruit professionals, as every possible employee seeks to work
in a company with strong values that fit with its identity.

As the companys values represent the foundation of the company, they cant be changed.
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5. Solutions
But a value will be added, not to change the companys identity, but to consolidate the
old one and to improve it. So, besides the old four values: confidence, honesty, respect
and pioneering spirit, a fifth value: innovation is finishing the companys framework.
By innovation, the companys focus is to encourage people to think differently and one
of the companys priority is to focus on research. Pursuing new creative ideas that have
the potential to change the world. Innovation is dynamic, as the employees and the board
seek always for new ideas and test them. This value should be in harmony with the rest
of the values, as the decision for implementation of a new idea should be made according
to the rest of the values and not to interfere with them.
Vision The vision statement communicates the businesss overall goals and serves as
a tool for strategic decision-making. It gives the companys shape and direction. It is
also considered as a weapon to motivate and guide the employees. Research shows that
employees that find the companys vision meaningful have engagement level of 68 percent,
being 19 points above average. Engaged employees are also more productive.

Also as the mission, the vision change with the companys evolution, so it must revised
constantly.
Safety is a top priority for the company, as the vision is to have zero workplace accidents.
The company has made many effort to improve their accident rate during the years, but
today it still remains an issue as the measures were not effective enough. An high accident
rate reflects in the eyes of the customers as lack of professionalism and some customers
clearly specify in the tender documents a low accident rate.
Through innovation, the companys aspires to renew the industry and to offer extraordinary
sustainable solutions. As the new technology take over the construction market, the
company aspire to contribute to the industry renewal through high-quality products,
revolutionary process or efficient managerial system. Extraordinary sustainable solutions
cover three areas:

extraordinary value for shareholders, zero negative impact over

environment and high-quality products and services offered to the customers.

As the company covers a wide area of services provided, they should be the best in all
they do. It has been found that an important competitive advantage that company has
is the wide area of services covered. To take more advantage of this, the company focus
should be on how to make performance in all these areas. So the company should be the
first choice of any customer for any kind of projects.
Due to the fact that the companys evolution looks promising, the company envisioned
to act independent in the decision-making process. The company has been proved to be
an important pawn on the construction in Denmark, capable to act independent and to
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5.2. The companys Goals for 2016-2020.

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take important decision by itself. As now the company needs the NCC Swedens approval
for big projects or for new investment, the decision-making process is a slower one and
not according to the needs of Danish construction market, but according to the Nordic
construction market.

5.2

The companys Goals for 2016-2020.

Based on the analysis made, the project group has made a set of goals that the company
should implement into their future strategy:

1. Provide key services based on internal suppliers.

2. Lower the work accident rate to 2.00.
3. Strengthen the companys research development.
4. Improve cooperation in NCC Group.

5.2.1

Key strategies.

1. Provide key services based on internal or partner suppliers.

Providing resources from sources that the company works directly with can provide
a large number of advantages for the final cost and overall execution of a building.
Some of the most important advantages are achieving a lower project cost, a smaller
execution time, a better control of the project and a better control over the profit.
1.1. Analyze the services that require expensive resources.
Having a clear view on what are the most costly services provided, NCC can
find focus points where to use their financial capabilities in order to gain future
advantages.
1.1.1. Analyze the production costs for the resources and compare them to the
price offers of your external suppliers.
This analysis will give the company a clear view on resources that have the
final cost unjustified. In general this case can happen for resources that
have a low number of suppliers.
1.1.2. Categorize the resources that might prove to bring benefits in case of NCC
having its own production base or having a partnership with the current
suppliers for the selected resources.
In case of resources that have a high unjustified price, NCC should analyze
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the future benefits that the company can achieve in their projects by supplying itself from internal sources.
1.1.3. Analyze the current market saturation and choose a set of resources that
might generate profit by supplying other companies besides NCC.
Besides supplying itself, NCC must analyze the possibility of supplying
other companies with resources in order to regain the investment in a
shorter time and generate more profit and choose the resources that might
generate the highest advantages in both cases.
1.2. Analyze the potential profit gain for the following scenarios: NCCs own production or a partnership with the current suppliers.
Having the set of resources the company wants to focus on, NCC must analyze
the two scenarios and have a good view on the future profits for both of them.
For resources with low level of market saturation, the most beneficial scenario
for NCC would be to invest in their own production and become one of the
main suppliers for the chosen set of resources. In case of uncertainty in the
companys capability to sell the resources that are not used in its own project,
the company should seek a partnership with one of the current suppliers for the
chosen types of resources.
1.2.1. Gather information on the benefits that the suppliers will offer the company
in case they are willing to conduct a partnership.
For the resources that the company decided to supply itself through a partnership, the company must find the suppliers that are available for a partnership and discuss the terms of collaboration. In this stage the company
should have decided on a set of minimum terms that it accepts in order to
have a clear objective for the negotiations.
1.2.2. Compare the total cost and the future possible financial gain between the
two scenarios.
1.3. Analyze the funds that the company can generate to fulfill the goal.
In this stage, NCC Denmark must have detailed information on both scenarios
and must communicate it to NCC Group along with the solution that the company sees the best. Depending on the funds NCC Group is willing to invest,
NCC Denmark must analyze if it is sufficient to reach their goal. In the case
of resources that NCC wishes to make their own production base and the fund
that NCC Group is willing to generate are insufficient, the company should seek
for possible partners in order to attain the lack of funds. Based on the financial
analysis made, the project group has decided that NCC Group has a strong
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financial power and might be able to support NCC Denmark financially in case
the solutions show high potential.
1.4. Choose the best solution based on the conducted analysis.
2. Lower the work accident rate to 2.00
It is in NCCs interest to have a accident rate as low as possible due to the disadvantages it can generate in its business, some of the most important disadvantages
are loss of profit, loss of reputation and inability to work in certain projects. NCCs
accident rate has improved in the past years and currently stands at approximately
5.00[]. Due to these facts, the project group has decided that a lowering the accident
rate to 2.00 should be considered as a goal in the companys strategy.
2.1. Expand the employment time for workers.
In order to have more people accustomed to the values and working methods
of the company, NCC should consider keeping its workers in the company for a
long period of time. Having workers in your company for a long time will save
the company from conducting a high number of initial training and will ensure
that the company has enough workers with experience on the construction-site,
this will lead to less errors and a better communication between the workers.
2.1.1. Develop methods to integrate foreign workers into the countrys society.
The integration of foreign people in the the countrys society might be a
point of focus if NCC wants to keep them for a long time in their company.
NCC currently works a high number of foreign blue collar and qualified
workers[], having them integrated correctly in the society will boost the
chances of them remaining in the companys activity for a longer time.
2.1.2. Offer advantages based on performance.
Another method for NCC to keep its employees in the company is to apply
a rewarding system based on performances, this will boost the employees
confidence and in the same time the company will ensure that its workers
see gain into working better.
2.1.3. Organize social events.
By organizing social events, NCC can offer its employees the occasion to
know each other better and to create bond. A important factor for how long
an employee decides to stay in a company is the people around him, developing good relationships will also boost the companys overall performance.

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2.2. Offer periodically training according to the current working methods in the
company.
Periodically training is a necessary thing due to the fact that a construction company often improves its working methods, this will ensure that all the workers
are up to date with the procedures and accidents provided by lack of knowledge
can be avoided.
2.3. Work with certifications designed to optimize health and safety.
One of the main focus for NCC when choosing a certificate should be health
and safety. Currently NCC works with certifications such as BREEAM, DNGB
and others that put accent on optimizing the construction process and offer a
good health and safety environment. In the near future, the company should
analyze every new certificate that shows potential in this area and implement
it into their working procedures.
2.4. Analyze the market for technologies that minimize human labor.
One effective way to avoid work accidents and boost the quality of the work
is also using modern automatized technology. NCC should analyze the market
for such technologies that are or will be certified to use in a construction process.
3. Strengthen the companys research development.
Currently, some of the most important assets in generating competitive advantage
comes from the research . The project group has decided that strengthening NCCs
research development is a needed goal for the company in order to maintain or improve its position on the market.
3.1. Analyze the market for potential future substitutes.
The company should keep a close eye on the market in order to detect future
substitutes that other companies could take advantages of and try to be the
first to implement them into their work.
3.1.1. Evaluate the threat level of the substitute.
When detecting a potential substitute, NCC should get a clear view on how
it will affect its activity on the market in order to decide whether it is in
their interest to take actions into avoiding the threat.
3.1.2. Analyze the cost, the chance of success and the financial gain in case the
company conducts its own research on the substitutes with a high level of
threat.
After detecting the substitutes that prove to have a high threat for the
company, NCC should analyze if it is beneficial for the company to conduct their own research on them and how many funds can they generate in
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order to cover the costs of the research.

3.1.3. Analyze the cost and the financial gain in case the company conducts a
partnership with the developers.
The company should also analyze the scenario of a partnership with the
developers, in what terms are the developers willing to create a partnership
with the company and what will be the future gains in case of this to happen.
3.1.4. Choose the best solution based on the conducted analysis.
3.2. Develop a partnership with Dantonit A/S regarding research on deep
foundations.
NCC should take into consideration the possible future raising needs for deep
foundations. One of the reasons for the possible raise is the expansion of the
constructed areas due to the population increasing from year to year, this might
force companies to build into areas with difficult soil conditions that have been
avoided. Another reason might be the future changes in climate, it is predicted
that the annual precipitation will rise significantly in the next 50 years[], this
will lead to higher underground water levels and more unstable soils. Even if
these events will not happen in the near future, the company should take the
advantage to build a history in this service area and use Dantonit A/S as a
research partner in deep foundations due to the fact that its the only bentonite
provider in Scandinavia.
3.3. Conduct research in partnership with other companies.
Another method for the company to generate competitive advantage through
research is to create a partnership with companies that NCC does not consider
as a direct competitor, these companies might have its activity in Denmark or
in countries that have similar building methods.
4. Improve cooperation in NCC Group.
4.1. More horizontal organizational diagram.
4.1.1. Rapidity and efficiency in decision-making process.
Vertical companies are dependent on a strong leader at the top and sometimes tall companies lack the transparency of a horizontal company because
each department interprets the information and by the time the information gets to its destination, it might be muddled. It also takes longer time
to take a decision, as the information gets harder to its destination and it is
filtered by departments that are not directly involved in the issue. Beside
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this, the employees can be less motivated and more frustrated due to lack of
responsibility and authority, not to mention the high administrative costs.
The horizontal structure facilitates the rapidity of decision making and in
case of a risk, a fast decision can be made before the repercussions to be
serious.
4.1.2. Act more independent in decision making.
NCC Construction Denmark, although that considers itself equal to all
members from NCC Group, it still needs to get the approval for big projects
from NCC Sweden. Also the decision to invest is taken by NCC Sweden,
according to the interview. And, as the construction market in Sweden
is slightly different by the Danish one, the decisions could not be the
most appropriate. NCC Danmark should have more independency when a
decision is made. It should be taken in collaboration with NCC Sweden,
but the final verdict should be from Denmark.
The studies have proven that more independency end responsibility a
person has, more motivated will be to perform in their job. The same
principle applies in this case: more independent will be NCC Danmark,
more motivated they will be and NCC Sweden will play the role of a mentor
and leader. According to Maslow, the self-actualization is a growth need
that every person has, which implies maximizing personal skills and talents
to realize full potential. The development at a full capacity is realized
when a person has a full authority over its acts and full responsibility of its
decisions. For NCC Danmark to reach its full capacity, it should be able to
be more responsible for its decision and to have full authority over them.
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4.2. An online platform for information changing.

4.3. Database available for everyone.
4.3.1. Information about previous projects.
For the new projects, the company should have access to similar projects
developed by other Group members. So the company could take projects
with higher degree of risk, in order to improve their order received. Previous experience of other similar projects could prove efficient in minimizing
the risk as people easily learn from mistakes.
4.3.2. Information about improved practical methods and implementation.
Another tool used to improve the construction process should be a set of
files comprising reports with new good practice and the manner they were
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implemented. This could be a guide line for the other members that want
to make an improvement in their processes.
4.4. General meetings more often.
4.4.1. Discuss the problems.
It is important to have more often the general meetings where the Groups
problems are discussed and feedback from other Group members is given.
Although that responsibility is encouraged among the Groups members,
serious decisions should be made after getting feedback from more points
of view.
4.4.2. Ask for advice and improved practical methods.
As previously mentioned, during general meetings the most important problems should receive feedback and solutions and examples of good practice
should be offered although that each region has its own and particular problems.
4.4.3. Send delegates from a member company to other.
For a better collaboration and good practices sharing, different delegates
should be sent to other Group member to learn and observe the processes
and to come back with a strong feedback.
4.5. Optimization in resource sharing.
4.5.1. Analyze the projects need for resources.
It is important to reduce the cost with the resources need, as a process can
be optimized and the best suppliers can be chosen in time.
4.5.2. Prioritization of resources.
The performance of a company can reflect in the success of their projects.
Big projects bring more profit to the company, but they can prove more
risky when it comes to resources. So it is important to prioritize the resources need and to split the resources where is more needed.
4.5.3. Develop resource sharing methods.
As some of the branches own more resources that other or other branch has
more projects ongoing, the communication between branches or between
Group members should be optimized and the resources should be shared.
During different seasons, a branch has more projects ongoing, but not sufficient resources, and maybe another close branch has extra resources not
needed. The resources sharing could be the optimal solution to reduce the
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cost with procurement or with storage. However, the cost with transportation is a factor that should be considered.

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Further Research

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