After reading the case “Restoration Affiliates,” reflect on the challenges of the organization. Build a value chain of the organization’s activities and identify the strongest and weakest link. Then, based on the information in the case, perform a SWOT analysis. Make sure that there are at least three strengths, weaknesses, opportunities, and threats each. Finally, based on your analysis of the value chain and SWOT, explain what is the most important strategic challenge or opportunity facing the firm and how it could be implemented

Answer:

Introduction

In 1987, Rich Piltch in Brooklyn founded Always Ready to Serve. It started as a cleaning and painting firm and then diversified into the business of remodeling and renovation. ARS had abandoned remodeling and renovation all together by the late 1990s and become a full-service repair and reconstruction company.

Piltch together with; Damon Gersh from Maxons Restoration, Ras Fenger from Disaster One, and Andy Goldberg from RestoreCore put together a collaborative and equal partnership in 2011, known as Restoration Affiliates (RA). It represented the attempt of smaller regional restoration and reconstruction companies to compete with big national players.

Challenges of the organization

In the past, by insurance agencies, repair contractors usually got the vast majority of their work. However, the arrangement was difficult between repair firms and insurance agencies. For contractors who exaggerated loss estimates and did more work than needed, insurers had their guard up. Insurers feel hemmed in by contractors. If they would see fit, the builders did not have free rein to complete a reconstruction. The last word came from the insurance firm.

Value Chain

Restauration contractors concentrate on getting everything back to its former state following a tragedy, unlike remodeling and restoration contractors. Their programs range from flood mitigation to mold remediation to restoration following a fire to washing up.

Weakest link

Designed improvements to the use of a room in a current residential home or commercial property are made by remodeling contractors. Specializing in renovation, builders take everything that already exists to make it modern.

Strongest link

Restoration companies or so called contractors, called during an emergency and in the wake of natural and man-made disasters, typically work on a particular job with more than one client. For example, repair contractors will deal with the insurance firm, who will actually fund the bill upon completion of the job; with the property manager, who is responsible for making crucial rehabilitation decisions; and with the renter.

SWOT Analysis

Strengths

As an affiliation of four restoration and reconstruction companies, Restoration Affiliates (RA) was an effort by smaller regional restoration and reconstruction firms to compete with large national groups.

Through delivering comprehensive messages to all involved parties on a regular basis, ARS distinguished itself from other repair service providers by providing reports on work done, equipment used, and next steps.

ARS has no system for voice-mail. To assess the seriousness of the job and if the caller had a previous connection or service arrangement with ARS, all incoming calls were placed through a certification process.

Weaknesses

A variety of crucial strategic questions needed to be addressed in order for RA to be successful, including: who or what body of decision-makers should be responsible for ensuring that all members committed to the progress of RA and adhered to the operational principles of the organization?

To what degree can there be criteria that govern how to run two dozen autonomous companies?

If more than one member has given facilities in the same territory, what should be the rule? For an enterprise based on partnerships, does the referral fee model that was in place make sense?

RA, however, wasn't the group's first attempt to create a collaborative alliance. Previous attempts made within the confines of Business Networks had failed due to those involved over promising and under delivering to clients and one another, and a general lack of trust

Opportunities

There is business potential in restoration. It is a recession proof business; demand for services was not influenced by the state of the economy.

Restoration is a much steadier business. The advantage to this business is that firms build the right relationships with the right people, it's like an annuity.

Starting in the mid-2000s, ARS began to shift its customer focus from insurance to property management companies. As much as 60% ARS's customers were property management companies that had priority service agreements. There was no fee involved in signing a priority service agreement. Customers paid only when they needed restoration or reconstruction services.

Threats

The restoration industry was extremely fragmented with thousands of private companies providing various services to local and regional markets. There were only a few companies that had national reach. National reach was what large property management and insurance companies were looking for from restoration and reconstruction providers.

Belfor was privately owned as the top national supplier. Belfor had 300 offices in 29 nations and $1.3 billion in annual revenues, and its U.S. division had 80 offices and 3,800 staff. The market was also made up of franchise service providers with 1,500 franchises, including family-owned SERVPRO, and publicly traded ServiceMaster Clean with 3,000 franchises and sales of $140 million.

Another big player in the market has been third-party managers (TPAs). Although rivals, TPAs were also clients of businesses such as ARS. Piltch noted that there was a risk of clients getting TPAs.

Opportunity Strategy

Growth-by-acquisition strategy. This can be implemented by acquiring local and regional restoration companies. As a result, a single market force can be created and dominate this steady restoration industry.