International Risk Company: Quanta Services in Houston

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Introduction

Quanta Services Inc is one of the leading infrastructural contracting companies in the United States. This company offers a wide range of services which include design, installation, repair, and maintenance of any type of infrastructure. The firm is widely known for its solution to natural gas, pipeline industries, and electric power firms. The world is increasingly getting competitive. Firms are realizing that there are some tasks that they may not be in a position to perform because of the emerging trends caused by the emerging technologies. For a very long time, firms have made a concerted effort to ensure that they have the needed workforce in every department to ensure that they have full control of the activities in that department. This strategy had its advantages, thus many firms preferred it then. However, the world is changing, and firms are forced to change with the changing environmental factors. According to Plunkett (83), the dynamics in the environment cannot be ignored. Any attempt to ignore the emerging trends can spell total doom to the firm.

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Quanta Service Inc came to this realization, and this defined its inception. This firm was started to offer an infrastructural solution to various firms, especially those in the energy sector. It has been able to ensure that petroleum companies, power supply firms, and other related firms have access to proper infrastructure that would ensure that there is a smooth flow of their product from one point to another. The management of this firm has made a concerted effort to ensure that the firm offers the best service despite some of the serious risks it faces in the market. This research is focused on some of the serious risks that this firm faces as it endeavors to offer a solution to its clients in various countries.

List of Risks and Exposures

According to Hoffman (29), every industry has its risks that firms face. Risks cannot be avoided, but managed. When a firm enters an industry, it is a fact that there are several risks that it will face in the process of operating in a given industry. A firm cannot prepare to avoid the risks because the only way a firm can avoid risks is to close down its operations. The only thing that management can do is to prepare on how to manage these risks, and how to convert them to competitive advantages in that particular industry. Quanta Service Inc is a contracting company that offers a solution to firms in the energy sector. This firm faces several risks in the process of delivering its service to the customers. The following are some of the direct risks that this firm faces in its operations.

Uncertainties in the industry are one of the risks that this firm has to deal with during its operations. The energy sector, especially the petroleum industry always comes with several uncertainties that may affect the operations of this firm. The United States is one of the leading consumers of petroleum products. This industry has a lot of uncertainties, including fluctuation of prices, the number of products available for transportation among other uncertainties. When the uncertainties strike, the firm will be forced to come up with mechanisms through which it will not overburden its clients. This may have a direct effect on its profitability in the industry. The fluctuation price of the products it uses in its operation forms another part of uncertainties in the production of these products in the market.

The economic and political environment are other risks that this firm must deal with in this market. The economy of the United States has experienced fluctuations in the near past due to several factors. Whenever the economy is affected in any way, the firm will always be forced to bear the direct effect of the economic changes. The economic crunch that hit the United States in 2008-2009 was a clear demonstration of how this firm can heavily be affected by economic changes in the country. Most of the firms that form the customer base of Quanta Service Inc were struggling to stay afloat. They were, therefore, cutting costs of operation, including any maintenance cost that could be postponed. This meant that this firm had to stay out of operations for some time, while it was forced to pay for all the fixed costs. This was translated into a massive loss to this firm. The political environment is another risk factor that this firm may have to face, now that it is expanding its operations to regions beyond the United States (Tarantino 93). The firm has enjoyed relative political stability in the United States that has helped it succeed in the face of various other challenges. The firm has also been able to receive government support on various fronts. However, this may change when the firm ventures into other countries outside the United States of America. Some of the benefits that it has been receiving locally may not be available in some of the foreign nations.

The need to offer satisfaction is another risk that this firm has to face. It is the responsibility of this firm to ensure that it offers satisfaction to all its customers. This responsibility may, however; turn into a risk if this firm is not able to meet the expected standards. As Hanna (112) puts it, a satisfied customer is beneficial to a firm, because it will attract another customer through positive evangelism of the firm. On the other hand, a dissatisfied customer is a threat because it will scare away other potential customers through negative evangelism. It is therefore the responsibility of this firm to go a long way in ensuring that it understands the emerging market trends to ensure constant customer satisfaction. This is a very challenging task in the current dynamic market. When this firm fails to realize the expected value from the customer, this can also be a risk, because the final product to the customer may fail to be satisfactory. If the product is not satisfactory to the customer, it will mean that the effort that was put in place by the firm shall have all gone to waste as the customer will not find value in the product.

Another risk Quanta faces is the delays that may be caused by some of its subcontractors. The clients may be too strict on delays in the construction of the infrastructure. Some may include penalties for any delays caused. When the sub-contractors fail to deliver products or perform the assigned tasks in time, the penalty will not only affect the financial position of the firm, but also its reputation.

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Another risk that this firm has to deal with is the threats posed to its workforce while on duty. There are numerous risks that employees of this firm are faced with while undertaking their duties. These risks, should they occur, will not only force the firm to spend resources treating the victims but will also be faced with a shortage of the workforce. If not taken care of in time, this may ultimately result in a delay in delivering work to the client. This may affect the cordial relationship that could have existed between the firm and the client.

Managing the Risks

According to Abkowitz (58), managing risks is one of the most important ways through which a firm can increase its profitability and success within an industry. As stated above, all the above-mentioned risks come with various penalties that a firm should be ready to pay. These penalties may harm the firm. Quanta Service Inc should, therefore, find a mechanism through which it can transfer the risks, or manage them in a way that they may not be affected. The risk posed by uncertainties can be transferred to insurance companies. This way, the firm will be able to operate without fear of the adverse effect of environmental uncertainties. The economic risks should be managed by having other alternative projects for the firm in case its clients are not ready to award its tenders. In dealing with the political environment, it will be important for the firm to understand the political environment of any country, and evaluate its effect on normal operations. The firm should also make an effort to develop a close relationship with governments in new countries that it plans to start new investments in. In managing the risk of poor performance, this firm should ensure that it employs highly skilled employees who are self-motivated, and determined to achieve the best result in the market. When contracting other firms, Quanta should clearly state to them that any consequences that will arise due to their failure to perform as expected will be carried out by the contracted firm.

This will help this firm avoid bearing fines that are not associated with it. When dealing with the risks of physical injury of its employees, the firm should ensure that all the employees wear protective gear while on site. They should also have the right instruments when performing various functions within the firm. It will also be important for the management to ensure that all its employees have an insurance scheme that will cover any injury during the process of working within the firm.

Operations outside the United States

Quanta Service has expanded rapidly and is currently operating in countries outside the United States. One of the counties that this firm has been operating in is Canada. Canada has offered this firm a massive market for its products, especially due to the geographical size of the country. This firm has found several clients in this country that have offered it several contracts. It is important to note that the external environment in Canada is very different from that in the United States. The insurance scheme in this country is very different from that in the United States. It is also a government regulation that any employee of an American firm employed outside the borders of the United States may not stand to benefit from some of the health benefits that this country offers.

This means that this firm will be forced to look for an alternative insurance scheme to cover its employees in other countries. Operations in other countries will also mean that the firm will have to understand laws and regulations that firms in these countries must observe. According to Grinsven (79), laws and regulations of conducting a business in one country may not be similar to that of another country. This firm should, therefore, understand some of the regulations in the new countries it seeks to operate in. this will help eliminate any form of friction that may arise due to lack of following some of the set rules and regulations.

Canada has comprehensive insurance scheme policies for all the employed individuals within the borders of the country. In Canada, there are regulations that every firm must deduct a specific percentage of the earnings of their employees as an insurance scheme. Quanta Service will have to remit this amount to the health insurance scheme as health coverage for all its employees. The insurance scheme is available to all employees working in both the public and private sectors. Quanta will be mandated with the task of collecting and delivering this amount to the relevant authority.

Political Risks

The United States is one of the leading democracies around the world. The country has been able to offer firms a stable political environment where they can operate with a lot of peace. This is one of the leading factors that have enabled Quanta to succeed in this industry. It is a fact that the political environment in other countries may not be as friendly as it is in the United States. Political risks are some of the major risks that would easily lead to a fall of a firm. Canada is another country known for its political stability. Political risks are, therefore, very minimal. It is, however, very important to note that this firm may not enjoy political support like that it enjoys back at home. It should be ready to face new political challenges that may arise in these new markets.

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Quanta Service operations in South American countries such as Brazil have also experienced relative political stability. This country enjoys political stability which has offered firms in this region opportunity to grow. The country has embraced democracy, and the change from one regime to another has been characterized by a lot of peace. There has not been any direct negative government impact on the operations of the firm within the country. The political leadership of the country has avoided any form of interference with businesses in this country.

The Effort made by Quanta Service Inc in Improving its Service Delivery

The website of this firm demonstrates how this firm has made a concerted effort of offering quality to its customers in the market. This firm has come up with mechanisms through which it can monitor and manage all its operations within and outside the United States. The firm has come to appreciate the fact that there is a form of competition that is very strong in the market. There are other major firms in this industry that offer similar products in the market. This firm must, therefore, appear unique in the market. It must be able to offer customers products that will be considered of higher value. To achieve this, this firm has hired about 19000 employees to work in various fields within the firm. This means that this firm will always have the right and enough workforces for every task. The management also appreciates the fact that the market has become very dynamic and therefore, managers must come up with measures to manage this dynamism. The firm’s budget in a yearly always includes $ 1,183,980 set aside for research and development. This is about twenty-five percent of its income. This means that this firm is in a position to understand market trends and work on them to ensure that it can control them. This firm also understands the importance of the emerging markets in Asia and the benefits and challenges they bring. The management has plans on how it can venture into these markets.

Works Cited

Abkowitz, Mark. Operational Risk Management: A Case Study Approach to Effective Planning and Response. Hoboken: John Wiley & Sons, 2008. Print.

Grinsven, Jurgen. Improving Operational Risk Management. Amsterdam: IOS Press, 2009. Print.

Hanna, Nick. The Green Investing Handbook: A Detailed Investment Guide to the Technologies and Companies Involved in the Sustainability Revolution. Petersfield: Harriman House, 2010. Print.

Hoffman, Douglas. Managing Operational Risk: 20 Firmwide Best Practice Strategies. New York: Wiley, 2002. Print.

Plunkett, Jack. Plunkett’s Telecommunications Industry Almanac 2009. Hoboken: John Wiley, 2010. Print.

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Tarantino, Anthony. Operational Risk Management in Financial Services. Hoboken: John Wiley & Sons, 2010. Print.

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