Sourcing Strategy in Construction - An Embedded Multiple Case Study of Winter Operations at NCC
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This study elucidates the make-or-buy decision based on two theoretical perspectives: the resource-based view and the transaction cost approach. Furthermore, the thesis investigates the sourcing strategy related to operation and maintenance. As NCC has previously taken the explicit costs into account, this study focuses on the "hidden" costs. The resource-based view is criticized as it does not address challenges associated with opportunism. At the same time, the transaction cost approach is criticized for not taking into account the company's specific circumstances. These theories will, therefore, fit together as they complement each other. As data is retrieved from two different operating contracts managed by NCC, this study should be regarded as an embedded case study. The practices from the Numedal and Ringerike contracts are evaluated in light of the theories mentioned above. Despite the fact that the contracts with the clients are identical, NCC has chosen different strategies in the two areas. The study evaluates whether or not NCC should produce some of the winter operation in-house, or purchase it. The sourcing strategy will be investigated with a special focus on the number of suppliers, the relationship with the suppliers and how to configure them. This is not a normal make or buy decision, as the customer has a claim that the contractor must have a minimum of 25% own production. At the same time, the Group Executive Management located in Sweden does not want NCC to perform winter operations in-house. Since this is not an ordinary make or buy decision, this study presents a process model that takes the factors that influence the decision into account. The results of the process model developed in this study are compared with the results of an established process model in the area and will form the basis for an assessment of NCC's procurement practices. It is concluded that NCC should have some proprietary production in the two contract areas. Both in order to acquire new core competencies, but also to strengthen the company s competitiveness. Regarding the sourcing strategy, it is concluded that relative to the size of the contract, NCC should use an equal number of suppliers. Furthermore, a transactional relationship is also recommended for the two contracts. Lastly, different configurations of the suppliers on the two contracts are recommended.