Running head: INTERVIEW OF PROFESSIONAL TREE CARES BUSINESS STRATEGY 1

Professional Tree Service

Carl Zweifel
Siena Heights University
LDR 660 Strategic Planning and Implementation
For
James W. Loughran, Ph.D.
PROFESSIONAL TREE CARES BUSINESS STRATEGY 2

Professional Tree Care
Introduction:
This paper is profiling Professional Tree Care of Jackson Michigan. The company is co-
owned by a father and son team, Bill Fox and Chad Fox. Their company has been in business
since 2005. In the beginning, they operated it as a side business because both of them were
working for a much larger tree company that specialized in vegetation management for the utility
industry. In 2010 when their company became a full time profession for Bill; he retired and
wanted to build Professional Tree Care into a full service tree care business.
When the interview was started it was clear that they did not have a business strategy
formalized and in writing. When questions were asked they had difficulty coming to agreement
on the answer. Their company is being operated by what they believe is in the companys best
interest with no data to back their decisions.
Strategic Management Process
Discussing vision, mission, and values with Professional Tree Care they could not pin
point a clear management process. They have a slogan Specializing in the hard to reach places,
they indicated this as there mission. We had a lengthy discussion around their vision and mission
and the sat and formulated statements for both, they realized that what they believed to be a
mission statement was not about where they wanted to be.
Vision
To support equality and foster harmony with man and nature.
Mission
Professional Tree Care is about customer satisfaction, and the care of natures greatest
creation, the beauty of the tree.
PROFESSIONAL TREE CARES BUSINESS STRATEGY 3

Values
Safety First
Honesty
Exceed expectations
Ecologically responsible
Embrace the community
External Analysis: Industry Structure, Competitive Forces, and Strategic Groups
Industry Structure: PESTEL Model

Political Factors
Many villages and cities have a preference to hire locally and will award contracts
for some of their work to the local business
Ordinances on hours worked and noise restrictions are enforced for many
communities.
Requires bonding for governmental contracts.
May be preference for minority owned companies.
Professional
Tree Care
Political
Economic
Sociocultural
Technological
Ecological
Legal
PROFESSIONAL TREE CARES BUSINESS STRATEGY 4

Economic Factors
Growth rate: Professional Tree Care has tripled in size in the last three years.
They have focused on long term contracts with Jackson County, Calhoun County,
the City of Marshall and the city of Jackson.
Interest rates: Professional Tree Cares Debt-to- Income-Ratio is positive for their
size of business and because of these they have a revolving line of credit with a
fair market interest rate.
Levels of employment: Wages paid to employees are a little higher than market
average for the industry. This helps retain employees and the company has very
little employee turnover.
Price stability: Price increases in the Tree Care Profession have been extremely
slow over the past twenty years. The increases do not keep up with the rate of
inflation and make it challenging for start-up companies to be competitive.
Sociocultural Factors
Contracts with counties and cities for emergency services.
Target counties and cities for tree maintenance for public safety.
Residential contracts focus on customer satisfaction.
Supports Arbor Day events.
Technological Factors
Certified Arborist by the International Society of Arboriculture.
Latest in Arborist tools and equipment.
Latest in Arborist training.
Industry latest equipment and techniques.
PROFESSIONAL TREE CARES BUSINESS STRATEGY 5

Ecological Factor
Contracted with environmental clean-up contractor of any hazards spills
(hydraulic oil spills, liquid fertilizer spills, and such).
The processed tree limbs are sold for mulch.
Wood is processed for firewood for home heating.
Tree maintenance prolongs the life of the tree (pruning of dead wood, fertilizing
for health, and removal of disease infested limbs).
Legal Factors
Human Recourses functions are contracted out to a company that manages
employee records and payroll.
Licensed, Bonded, and Insured.
MDOT requirements: Commercial Driver License (CDL) regulations, vehicle
inspections, Medical Fitness, and Fitness for Duty.
County permits to work in and on road rights-of-ways.
Structure-conduct-performance (SCP) model
Professional Tree Care operates in a Perfect Competition Industry there are many
competitors in the area of the same size and skill level. Johnnys Tree Service has been operating
in south central Michigan for over 50 years and has established their company as competitive
with the other companies in their operating territory. Daugherty Tree Service also operates the
same territory as Professional Tree care and has established their company with over 25 years of
experience. In a perfectly competitive market as OSullivan, Sheffrin, and Perez state (2008),
one company that offers a service that is a fraction of the total needed cannot change the market
price of the service.
PROFESSIONAL TREE CARES BUSINESS STRATEGY 6

Five Forces Model

Threats of Entry
There are many individuals that work for tree maintenance companies that
provide these services for additional income.
It is very inexpensive to get started with minimal tools and equipment. Low
overhead costs for start-up.
Power of suppliers
There are a limited number of manufactures for quality tools and equipment and
the prices are competitive among these companies.
Power of buyers
The very large companies such as Davey Tree, Bartlet Tree, and Wright Tree
have buying power because they purchase such large quantities of tools and
equipment.
Threat of substitutes
There are two companies that operate out of the Jackson area that will provide
tree removal services at a very low cost; they make their money from the saw logs
that they get from the job.
Rivalry
Among
Existing
Competitors
Theat of
New
Entrants
Bargaining
Power of
Buyers
Theat of
Substitute
Products
or Services
Bargaining
Power of
Suppliers
PROFESSIONAL TREE CARES BUSINESS STRATEGY 7

Rivalry among existing competitors
There are many competitors for the available work, this keeps the price charged
for the work lower than similar geographic areas.
Internal Analysis: Resources, Capabilities, and Activities
Resource-based view

VIRO framework
Valuable
Professional Tree Care choose their name to distinguish its self from the other companies,
most of them are named after the owner and uses tree service in the company name. Tree care
implies a company that takes a personal interest in the customers trees.
Rare
In the tree care industry there is not a company that is offering anything out of the
ordinary. There are a few companies that specialize in moving extremely large trees to bring a
mature look to the landscape; however this service is not common.
Tangible
Physical Attributes, Visible
Up to date fleet of tree
maintenance equipment
Chad is a member of the
International Society of
Arboriculture
Chad is a Certified Arborist
Intangible
No Physical Attributes, Invisible
Bill was the plant manager for Crankshaft
Corperation
Bill managed the off-road heavy equipment
crews for Wright Tree
Bill Managed the vegitation control spray
program for Wright Tree in Michigan
Chad has been in the tree care industry for 20
years
Chad has been supervising tree crews in Jackson
area for 15 years
PROFESSIONAL TREE CARES BUSINESS STRATEGY 8

Costly to Imitate
The cost to enter into the tree care industry is not extraordinary, and companies can start-
up, building their resources as they grow.
Organizes to Capture Value
Value is captured by the large number of contacts that have been made over the years that
the owners have operated in and around the Jackson area.




Porter (1998) states a firm that is stuck in the middle is in an extremely poor strategic
situation (pg. 41). Professional Tree Care has not branded themselves to stand out over their
competition. There are a limited number of markets in the tree care industry, residential, right-of-
way maintenance (roadway, pipeline, or electric utility) to name a few. Professional Tree Care
has limited themselves to focus on roadway maintenance and a small market share in the
residential market.
SWOT analysis
Strengths
Owners are passionate for their company.
Professional tree care is competitively priced with competition.
Professional tree care has a reputation for quality work.
Valuable?
Rare?
Costly to
Imitate?
Organized to
Capture Value?
Substained
Competitive
Advantage
Competitive
Disadvantage
Competitive
Parity
Temporary
Competitive
Advantage
Temporary
Competitive
Advantage
PROFESSIONAL TREE CARES BUSINESS STRATEGY 9

Employees are dedicated to Professional tree cares success.
Owners have numerous contacts for large county and company contracts
Professional tree care is well established with the counties they contract to.
Weaknesses
Professional tree care has not fully expanded into the residential market.
They are not fully equipped to competitively challenge competitors for market
shares in the residential market.
Focused on to small of the industry for business stability.
Opportunities
Expand into other areas of right-of-way maintenance.
Rent equipment when needed to be competitive in other markets of tree care.
Threats
Tree care industry is extremely competitive.
Other tree companies are better equipped for residential tree care.

Strengths
Passionate for their
company.
Competitively priced with
competition.
Reputation for quality work.
Dedicated employees

Weakness
Not fully expanded into the
residential market.
Not fully equipped to
competitively challenge
competitors
Focused on to small of the
industry for business
stability
Opportunities
Expand into other areas of
right-of-way maintenance.
Rent equipment when
needed to be competitive in
other markets of tree care.


Threats
Tree care industry is
extremely competitive.
Other tree companies are
better equipped for
residential tree care.


PROFESSIONAL TREE CARES BUSINESS STRATEGY 10

Reviewing the external environment, using the PESTEL Model, and the Five Force
Factor developed by Porter. Along with the internal environment, using the Resource-based
view, the VIRO framework, and SWOT analysis determines a companys standing in their
industry. Ghillyer (2009) indicates that the SWOT analysis is an important tool to utilize to
evaluate a business performance.
Competitive Advantages and Firm Performance
Economic value creation
The next calculation are created from one of the contracts that Professional Tree Care has
been awarded. It is a Time and Material (T&M) contract with conditions for performance.
Value-the value is hard to compute, but prior to Professional Tree Care being award this
contract, the organization provided this service there self. When they provided this service they
had high cost because their employees made more per hour, had better benefits, and used very
expensive equipment to complete their work. They also experienced multiple injuries and a death
of an employee.
Price-the T&M contract rate is $135.00 per hour this includes a two man crew and all
equipment needed to perform the required work. Material cost only comes into play if they are
asked to perform outside of the language duties of the contract.
Cost-the cost to offer this service is $112.55 per hour. This includes employee pay,
equipment cost including maintenance and fuel, and administrative overhead.
Accounting profitability
The companies that are competitors are privately owned and obtaining financial
statements for comparison has been difficult. Utilizing the internet to research the tree care
PROFESSIONAL TREE CARES BUSINESS STRATEGY 11

industry has only produced information for large corporations that compete in a different market
segment.
Business Strategy: Differentiation, and Cost Leadership,
Business-level strategy
Who - Commercial, residential, and government agencies.
What - Full service other than tree planting requiring specialized equipment.
Why - These are the core services offered.
How - Offering a competitive price and quality service.
Differentiation strategy
Product features The services offered do not stand out from services offered by other
tree care companies in the region
Customer service is an area that is focused upon, calls from customers for estimates for
work are responded to the same day as much as possible, when work is scheduled the customer is
called that morning to confirm the crew arrival time. If the schedule has to be changed the
customer is contacted.
According to Kreitner (2009), the service provided has to offer the customer more than
the competition to make the customer believe your company is superior to the competitors.
Cost-leadership strategy
Cost of input factor - The cost of operating Professional Tree Care is similar to the rest of
the industry in the same geographic area.
Economies of scale Professional Tree Care is average size for a privately owned tree
care company in their geographic area.
PROFESSIONAL TREE CARES BUSINESS STRATEGY 12

Learning curve effect With above normal employee retention rates Professional Tree
Care has gained production by pairing the same people together as crews. These crews have a
working relationship that allows for higher outputs due to knowing each others work style.
Experience curve effect Professional Tree Care has held the contract for road rights-of-
way tree removal and trimming for 3 years. This has given the opportunity to learn new
technique, along with purchasing new equipment that has allowed their crews to complete the
work faster with less stress and fatigue.
Organizational Culture
Culture is the hardest for a company to change, a company can state they want their
employees to act a certain way by the values the company adapts. Cummings and Worley (2009)
indicate the norms are what people see and the unwritten rules, an organization can apply their
values by their actions.
Conclusion:
This assignment helped me understand the course materiel by putting what I had learned
into an actual project. The areas that provide the most valuable and interesting were the
relationship between external factors and internal factors. Using the PESEL Model, the Five
Forces Model, VIRO Framework, and tying these together with the SWOT Analysis, to get an
overview of competitive advantage.
The information I gained from this course has helped me understand the strategy that the
company I work for has been working to change. Two years ago part of the company was
restructured to improve customer satisfaction. The group I worked in was broken into three
segments, emergent work (emergency, storm, work that needs immediate attention), short cycle
work (new business, customer needed work), and long cycle work (system improvements, work
PROFESSIONAL TREE CARES BUSINESS STRATEGY 13

that improves customer electric quality). My work group focuses on the long cycle work, this is
the large projects, most of the time the only noticeable difference when we are completed is the
number of outages that have been reduced by improving the system. My crews can and are
pulled from their jobs when storms take place, adding a large number of crews to assist with
electric service restitution.
I interviewed a small privately owned company and most of the course reading was
directed towards investor owned companies. The first six chapters aligned with my interview
and the company strategy or lack of. The remainder of the reading did not apply for the service
they offer or the size of their business. If they decide to grow to a larger corporation it would be
interesting to see how the additional business strategy information would fit.
Strategy in organizations is positioning the company to take advantage of their core
strengths. It is also looking to the future and positioning the company to be on the leading edge
of the market change. Another factor is to watch the competition for areas where they let their
guard down and your company can move in to take their market share.
This started as a conceptual project to put what I had learned in Strategic Planning and
Implementation course; however it turned out to be very beneficial to the company that I
interviewed, it also opened my eyes to the errors that I had made when I owned my own business
in the 1980s. .
PROFESSIONAL TREE CARES BUSINESS STRATEGY 14

References
Cummings, T. G., & Worley, C. G. (2009). Organization development & change. Australia:
South-Western/Cengage Learning.
Ghillyer, A. (2009). Management: A real world approach. Boston: McGraw Hill.
Kreitner, R. (2009). Management. Boston: Houghton Mifflin Co.
O'Sullivan, A., Sheffrin, S. M., & Perez, S. J. (2010). Economics: Principles, applications, and
tools. Upper Saddle River, N.J: Prentice Hall/Pearson.
Porter, M. E. (1980). Competitive strategy: Techniques for analyzing industries and
competitors. New York: Free Press.