Moving forward Macmahon Phosphate Hill
A FIELD PROJECT INVESTIGATION REPORT ON THE MACMAHON PHOSPHATE HILL PROJECT
Table of Contents
III. Creating an Uncontested Market Space
IV. Achieving Organisational Ambidexterity and Firm Growth
A. Following Tushman and O’Reilly
V. Resource and Competences: Achieving the Vision
I. Introduction
Growth and development of an organisation rests on the ability of the company to strike a balance on the demands of the external environment and to stretch the internal capabilities that they posses. Success in this area could only be achieved through close acquaintance with the strengths that they possess within and conducting an appropriate planning scheme. In this paper, the case of Macmahon Phosphate Hill Project will be taken into consideration. An analysis of the inherent capabilities and competencies of the firm will be made and consequently find a fit with the long-term objectives of the company. In this manner, the discussions will employ several strategic models to determine the possibilities of the realisation of these long-term objectives. Specifically, the company will be looking on the creation of an uncontested market space by using the Blue Ocean Strategy. In the same manner, the paper will also provide an analysis on its pursuit to achieve growth by taking on activities that will lead to the ambidexterity of the organisation. After this, an examination of the perceived competencies of the Macmahon Phosphate Hill Project will be provided and determine if it fits with the actual vision of the organisation. The discussions, observations, and arguments provided in the ensuing part of the paper will be supported by the academic journal and scholarly articles that directly deals with organisational strategy with particular reference to the Blue Ocean Strategy, ambidextrous organisations, and core competencies.
II. Background of the Company
MacMahon Holdings Ltd is one of the top contractors in Australia with focus on both construction and mining. In this paper, the focus will be on securing the contract on the Phosphate Hill Project. The intended project will be conducted in Northwest of Queensland. The following discussions will be pinpointing the overall objectives of the organisation to secure the contract and improve the performance of the said project. The subsequent parts will be discussing the long term and the short term objectives of the company. In doing so, a clear presentation on the arrangements made by the company will be showed and consequently analysed in the subsequent parts of this paper.
A. Long Term Objectives
Phosphate Hill is one of Australia’s lush sources of phosphate deposits. Located in Northwest Quessnland, the rock phosphate reserves in this area provide easy access to mining and recovery. MacMachon holds the current contract in this area to mine these phosphate reserves. However, this agreement is bound to end in less than a year, January of 2009.
To this end, it would be a great loss for the company to lose this consignment to another contractor. With ample resources to mine and accessibility huge amounts of revenue will wither away if MacMahon loses the consequent contract. Thus, the long term objective of the company is to secure the contract of the Phosphate Hill Project which will conclude in January of 2014.
B. Short Term Objectives
In order to secure this contract, the company has to address certain changes to improve their operations in the said project. Specifically, changes in manpower, plant and equipment, supervision of the mining area, fertiliser shed, Gypsum stacking area, and planning and mine design.
In the context of manpower, MacMahon intends to improve productivity by adding at least 120 more staff members to take on the mining operations of the project. In the same manner, this additional manpower will also constitute an inclusion to the engineering department as well as machine operators and support staff. In this manner, more things will be done and at a lesser amount of time.
In the case of plant and equipment, McMahon manages a fleet of trucks, excavators, loaders, graders, dozers and water trucks. The main objective in this part of the operation is to increase the light vehicles to at least four (4) additional units. In the same manner, the existing fleet will still be used but is ensured that regular checking and maintenance is carried out.
In the mining area, the company intends to acquire full responsibility on the mining of waste and ores in the project. This also entails that they acquire full supervision of the process. In order to realise this, the company will have to bar two of the customer supervisors in this part of the operations. Basically, this will take the legal liabilities away from the customer and place it entirely on the company. This will also be the case in the supervision of the Fertiliser Shed and Gypsium stacking area of the operations. The two customer supervisors will be absolved of their responsibilities in the area.
On the part of the planning and mine design of the project, MacMahon intends to amplify the area on which they intend to survey. In this regard, the company is able to establish potential assets and liabilities in the area. Moreover, the planning department will constitute the same number of staff to ensure continuity of the planning process.
III. Creating an Uncontested Market Space
In the realm of business, competition is possibly one of the most constant factors. Studies have intimated that this could pose positive and negative outcomes for the individual organisation. The presence of competition normally shows the benchmark of effective operations and performance in the industry. However, it could also be the sole element that could cause a company’s lacklustre performance in terms of acquiring greater market share. In the study of Chan and Mauborgne (2004), they formulated a new model that makes competition an irrelevant factor in the organisation’s operation: the blue ocean strategy. Basically, the principle behind this new business perspective is to create a new demand unique of a particular organisation. This is done by aligning the activities of the firm with the more specific strategic choices of differentiation and consequent low costs of operation. To start this process in the Macmahon Phosphate Hill Project, the four action framework of the blue ocean strategy will be used.
A. Four Action Framework
To start on the creation of the uncontested market, the four action framework of Chan and Mauborgne (2004) will be employed in relation to the case of MacMahon.
1. Eliminate
In this part of the framework, consideration on which part of the industry is taken for granted and thus would be gainful to be done away with. In the context of the Macmahon Phosphate Hill Project, the main element that is eliminated is the presence of two supervisors provided by the customers. In this manner, the company is taking full responsibility of the supervision of the operations.
2. Reduce
In this part of the framework, elements in the organisation that should be reduced just below the standards of the industry are determined. In the case of the Macmahon Phosphate Hill Project, the supervision on run of mine (ROM) should be reduced. In the same manner, the access of the customers on the overall operation and consequent legal liabilities on the project should be significantly reduced.
3. Create
In this part, the Macmahon Phosphate Hill Project should realise which part of the industry should be created and thus create demand for the organisation. In this case, the creation of efficient operations on the company and in the same time absolving supervision responsibilities on the part of the customers is required in the process. In this regard, the elimination of the customer supervisors will reduce the costs incurred by the customers and consequently add to the overall efficiency of the project.
4. Raise
Elements of efficiency and company responsibility are among the elements that should be raised in the industry. These standards would provide the confidence on the part of the customers to give the full responsibility to MacMahon.
B. Formulation Principles
The following discussions are still based on the Blue Ocean Strategy model of Chan and Mauborgne (2004) In the mining industry, the major customers implement a hands-on approach in the supervision of their merchandise. In the case of McMahon, they are starting to build on the reputation of the company as a responsible organisation and consequently take on the overall mining operations. In the same regard, being one of the top contractors in the land, it is apparent that the customers will not be contributing more on the elements of manpower and equipment as the company already has its own fleet of machineries and throngs of staff to deal with the needs of the project.
Based on the four action framework of the company, the project needs to improve on its efficiency and productivity, thus additional manpower and equipment is made. Being one of the top contractors in Australia, they may well have numerous advantages over the substitutes of their business. However, to offer full responsibility on the project both in terms of technical, professional, and legal areas, the elimination of customer supervision is deemed necessary.
In order to maximise the findings of the four action framework, the company needs to establish the appropriate sequence of the strategy to facilitate the realisation of the blue ocean idea. Finding the appropriate buyers in the area is apparently effortless as there is no other viable alternative than reacquiring the Phosphate Hill account of the company. The price offered by the company is also reasonable as it offer a wide range of capabilities such as sufficient manpower, sufficient set of light and heavy machineries, great company reputation, and full corporate responsibility.
IV. Achieving Organisational Ambidexterity and Firm Growth
As indicated in the earlier parts of this paper, the industry that MacMahon operates in is a highly dynamic sector. This means that the company is bound to encounter changes, anticipated or unforeseen, in its operations as they tread along the completion of a particular project. It is this volatility of certain industries and markets that O’Reilly and Tushmann (2007) maintained that an organisation should show signs of ambidexterity if it intends to survive this vicious milieu.
Thus, following the principles of the said model, it is important that the Macmahon Phosphate Hill Project realise their exiting capabilities, as intimated in the earlier parts of this paper, and consequently reconfigure it to fit a unique and completely different set of competitive advantage on the firm. In the context of the market and the external environment of the organisation, it is also imperative for the organisation to “explore and exploit” it. (O’Reilly and Tushmann 2007) Based on the four action framework of the project, the changes that it intends to impose on the structure of the Macmahon Phosphate Hill Project will essentially make them win over the customers in giving them the new contract. However, this could only be done if they exercise exceptional capabilities of flexibility and adaptability in the market within the means provided by their competencies.
A. Following Tushman and O’Reilly
The studies of Tushman and O’Reilly have triggered numerous accounts of analysis pertaining to the ambidextrous organisation. In this part of the paper, several studies that could be applied on the Macmahon Phosphate Hill Project will be given. For instance, in order to maintain an ambidextrous organisation, MacMahon must realise the importance of leadership in the spectrum. (Valle 1999, 245) Having the project managers to regard the cultural dynamics of the overall project team will allow them to steer the group towards the realisation of the long-term goals of the organisation. This is manifested in the context of the application of the individual short-term objectives by managers to fit the existing culture and behaviour of the staff and the other specialists in the project. Finding this fit will essentially translate to having the outcomes complement the long-term goals of the company.
This flexibility allows the company to establish clear cut requirements for the project. As seen in the long-term objectives of the organisation, it requires the specific short-term goals to show some highly innovative changes in the operations of the project. However, it is important to point out the vital nature of the “enabling features” of the project. (Adler and Borys 1996, 61) Specifically, these features point to the collaboration of the staff and the management in the realisation of the individual short-term goals. In the same manner, it is also shown in the capability of MacMahon to share the control on its management team and staff with reference to completing their jobs and meeting the standards expected of them. On the whole, with the key element of complete responsibility and supervision of the project, it is imperative that a culture of collaboration and an acceptable standard of quality are made commonplace not only in the Macmahon Phosphate Hill Project alone, but with the entire organisation as a whole.
B. The Vivid Description
The company has allotted a considerable number of its resources in the Macmahon Phosphate Hill Project. For instance, it has a total of at least ninety staff members, 70% of which are dedicated into the operations of plant and equipment needed for the project. These operators are in charge of operating the Komatsu trucks (8), excavators (5), loaders (4), grader (1), bulldozers (2), and water trucks (2). As said in the short-term objectives of the company, they intend to add at least four light vehicles in this fleet and consequently add over a hundred to help in operating and maintaining them. The company is in charge of the hauling roads, drainage, and construction of these roads, installing safety barriers, dust control, dewatering, and ramp control. All these are supervised by two company supervisors and two customer supervisors.
The fertiliser shed houses the relocated loads from the mine site. The company is in charge of maintenance and clean up in this area. On the other hand, the Gypsium Stacking area is where the loads of the said elements are stocked. Collaboration of the customer and MacMahon in the operations is apparent. As mentioned in the short-term objectives, the latter will be imposing the complete management of the operations in the project. This means that the operators of the machines and supervision will solely be held by the MacMahon employees.
Moreover, the company intends to negotiate the cost of the operations to the customer as apparent changes will transpire. The meetings between the customer and MacMahon should ensure that the cost on the former will significantly reduce to some extent. However, they must meet MacMahon halfway and provide considerable leeway in operating the customer’s main office and processing plants. In this way, both the MacMahon and the customer will have reasonable reductions in costs and consequent accumulations in terms of efficiency of operations.
V. Resource and Competences: Achieving the Vision
The discussions above has shown that the Macmahon Phosphate Hill Project intends to realise its long term objectives by finding a fit with regard to the demands of the customer and stretching the limits of their own resources. In this regard, they are offering considerable value on their labour. Looking at the plan of the MacMahon, they are offering to cut down the costs of operations on the part of the customer in order to make the operations of the project more efficient.
This, at the very least, offers added value on their services. The customer in this context will have a contractor that is willing to add up more personnel and add more machinery to increase the output of the operations. To boot, the customer will have significant reductions in terms of their responsibilities and subsequently maximise their personnel as they could place those supervisors to other areas of their operations.
With the innovations made to complement the demands of the customer, MacMahon has significantly created value on their services. To some extent, MacMahon is sufficiently offering the customer to acquire all the mining details of the operation provided that they are given enough independence on how to conduct it. All in all, MacMahon is giving a very lucrative deal to the customers and with is resources and competencies as a contractor; there is little doubt that they will be able to secure the new contract.
VI. Conclusion
Organisational development will not, and could not, take place without any form of a beacon that will guide the organisation towards the realisation of its goals. In this case, the long-term plan of Macmahon Phosphate Hill Project serves as this guiding light. The discussions above have made clear definitions on the competencies and capabilities of the organisation. This paper consequently made suggestions on how to stretch these competencies to maximise the returns on the company and in so doing realising the long-term endeavours of the organisation one step at a time. In the same account, the discussions above have implied what the external environment demands of Macmahon Phosphate Hill Project. In realising this aspect for the organisation, finding a fit with the competencies and capabilities of the organisation implies that Macmahon Phosphate Hill Project should start seeking improvements towards having an ambidextrous organisation.
All in all, the company operates in a highly competitive environment. However, the analysis above intimates that they are able to withstand this intense environment given their tangible and intangible competencies. The toughest competitor that they have now is themselves. Specifically, if they veer off the path provided for by their long-term plan and by the specific actions needed to build a formidable front to deal with the market, then they are bound to fail. However, this does not mean that the company is not allowed to show some flexibility. In fact, they should show more of this attribute to keep the company afloat. Nonetheless, this should not be an excuse to take its gaze away from the ultimate goals of the company.
VII. References
Adler, P. and Borys, B. (1996) "Two Types of Bureaucracy: Enabling and Coercive." Administrative Science Quarterly. 41(1), 61.
Chan, W.C. , and Mauborgne, R. (2005) Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant. Harvard Business School Press: Harvard.
O'Reilly, C., and Tushman, M. (2007) "Ambidexterity as a Dynamic Capability: Ressolving the Innovator's Dilemma." Available: www.hbs.edu/research/pdf/07-088WP.pdf [Accessed 11 April, 2008]
Valle, M. (1999) "Crisis, Culture and Charisma: The New Leader's Work in Public Organizations." Public Personnel Management. 28(2), 245.
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