Strategic Management in Construction: Atkins Company - Case Study Example

Student Name: XXXXX Tutor: XXXXX Title: Strategic Management in Construction: ATKINS COMPANY Course: XXXXX Institution: XXXXX Date: XXXXX Introduction Atkins is an Engineering and consultancy company with a regional office in the UK. The company also has offices in other parts of the world including North America, Asia and some other parts of Europe. The company was formed way back in 1938 as a civil and structural engineering design company. It is among the most profitable companies in the world today and it was ranked as the 13th largest design firms in the world in 2011. The company offers architectural and design services project planning and project management. The company employees more than 17,000 members of staff throughout its offices. In the UK alone, the company has about 9,640 employees. Over the years the company has experienced a massive growth and has been awarded multi million contracts. The company is quite profitable and it was ranked position twenty two in terms of profit making in the year 2011 (Atkins, 2012).. Scope of the Project Atkins is among the fastest growing companies in UK in the engineering industry. The company is very profitable and well managed. It has a dedicated workforce and good strategies and policies that are geared towards the growth of the company and customer satisfaction. The papers will therefore discus the core values of the company, its mission, growth strategies and the challenges the company faces. Mission and vision of the company The company is committed in the provision of services that fully satisfy the clients. As a result of this, the company has been able to execute all its mandate succesfuly. In its statement, the company is aimed at gaining the trust of the clients by ensuring that the deadlines are met, costs are controlled and success is delivered. The vision of the company is to become worlds best infrastructure consultant. This the company aims to achieve through developing deep local expertise, addressing the clients needs, building transport utilities, social environment and selling expertise (Atkins, 2012). The priorities of the company are mainly: To have high performing business. Addressing attractive sectors. To be the market leader. Observe healthy and safety standards. Embed low carbon design in all its design parameters. Maintaining high standards of business integrity. Hardwork and team work. Challenges faced by the company. Due to then economic situation in the world and particularly in UK, the company has undergone various challenges. The company has also faced a lot of internal challenges resulting from the huge workforce and policies set by the organization. The competition in the market has also resulted to some challenges faced by the company. However the company has also developed strategies to deal with the challenges. Cash management Due to the increase in the prices of building materials, the company has been forced to incur huge additional expenses. This is especially in the railway building services. Inflation in the UK is the major contributing factor to this. In some instances the company successfully wins a contract with a fixed tender sum. However, in the course of construction, the prices of the building materials increase to almost double. Most clients pay up to ten percent of the tender sum incase of such increments. However this is not enough in most cases. This affects the profit margins of the company. It is also based on the fact that the company cannot abandon its contracts due to such factors. The company in some instances has to import machinery and other special materials. The inflation affects the cost of importing gods and the company has to pay for the extra costs. This makes the operations quite difficult fir the company. As a result of this there was a drop in profit margins in 2011 as compared to 2010. In the year 2010, the company was able to post a pre tax profit of £77.3million. However in 2011 there was a reduction and the company posted a pretax profit of £61.4million. This drop in the profit margin clearly indicates the strain that was put on the company by the high cost of operations. The revenue for 2011 was £926.5 million compared to 2010 which was £983.5 million (Atkins, 2012). The company also had to be sensitive on the need of its employees. The company had to increase salaries and wages for its employees so as to caution them against the high rate of inflation. The pension for the employees has also been increasing over the years which affect the profits. This factor also contributes to an increment of in the operational costs. The crisis in the Middle East also contributed greatly to an increase in the price of fuel. This led to the company incurring extra expenses in terms of transportation. This is also considering the fact the company uses heavy construction equipment that consumes a lot of fuel (Helm, 2011). High number of employees The company employs 9,640 employees in UK alone. This is in its areas of operations. The company has more than one hundred offices throughout the United Kingdom. Most of the employees are however field based and work in the project t areas. The company treats its part time employees will all requirements of the law. This therefore means that the company pays wages as well as allowances for al its employees as well as pension for retired employees. The company however requires the large workforce so as to carry out its duties and serve the clients appropriately. The large number of employees has however led to increase in cost. This is after the employees negotiated for wage and allowance increment. This has seen the company pay a lot of money to the employee. To some extent, this affects the future of the company mainly because future plans are based on the present savings and investments by the company. The company has also found it challenging to implement some issues due to the huge workforce. It takes quite a long time for all the employees to be trained on new concept. It therefore forces the company to train the employees in shifts. These leads to non uniformity as some of the employees are trained earlier than others (Carmona, 2004). The company also faces a huge crisis in terms of the employee welfare that it has to pay for. The company is paying quite a lot of money for the insurance of the employee. This is a requirement for any construction and Engineering Company in the UK considering the risks involved during construction processes. The huge workforce therefore presents a challenge to the company’s human resources department as well as the finance and welfare department. Competition With the entry of new companies in the construction industry, competition for clients has become quite intense. The new entries have lead to the narrowing of market share among the competing industries. Most companies invest a lot in order to come up with better services so as to beat al the competitors. This has resulted stiff competition in terms of service provision and Atkins Company has also not been left out. It is putting in place a lot of strategies to beat its competitors. Despite this, the competition has taken a big toll on the profits of the company. The company spends a lot of money in financing market surveys and creating innovations so as to become the best (Cavaglieri, 2011). The company has also been forced to invest a lot in terms of marketing and advertisements so as to beat the other competitors in the market. Some competitors have also adopted the use of modern equipment and technology in terms of carrying out its activities. This equipment produces good results and they are fast and accurate. It takes a shorter time to complete a project when using this equipment. This therefore enables the competitors to carry out many projects successfully. This has forced the company to strategize on how to compete with these firms without incurring loses as this modern equipment are quite expensive to purchase and it requires a lot of skills to operate them. Despite the competition, the company is still able to make gains from the industry due to its dedication and commitments to the clients. Economic, Political and Environmental Factors Some of the challenges facing the company are way beyond it. The company cannot control such factors since it has no power to do so. These are mainly the external factors caused by other forces in the marketing environment. The economic situation in the UK has been quite tough in the recent past. This is mainly attributed to global recession. The company has no powers over this factor. The global recession has cause instability in the market in UK causing a lot of damage in the construction industry. Most of the clients have put on hold most of their projects and instead are focusing on other areas. This is mainly because the clients are operating under a lot of financial pressure and they will end up being affected by investing heavily in the construction industry. The clients may not be able to raise money to complete their project which may result in the projects staling midway. As a result of these factors the number of clients has greatly reduced (Pollock, 2010.). Corporate responsibility Environmental conservation has also been a topic of discussion in the recent past by most world leaders. The UK government pledged to cut its carbon emission so as to protect the environment and counter climate change. This therefore means that the set legislations have to be followed by the companies in the construction sector. The company has invested a lot in the reduction of carbon emissions. The company began a critical design awareness program in 2008 to encourage senior managers to engage their teams in the role the field engineers will play in reducing carbon emission. The company has been forced to purchase equipment which is environmental friendly so as to abide by the regulations on carbon emissions. This has piled a lot of pressure on the savings of the company. Such plans were not in the company’s budget but had to be done. These external factors have thus posed quite a big challenge to the operations of the company. Opportunities Despite the huge challenges that the company is facing a lot of opportunities are also available for the organization to continue excelling in the sector. This can be attributed to the strong principles towards customer satisfaction and innovations. The policies of the company are also focused in the future and adoption of modern technological means of Engineering design and construction. The level of integrity in the organization is also quite high and company has always performed exceptionally well in all the tenders it has been awarded. The numbers of accidents are also quite few compared to other companies. As a result of this the company has a lot of potential and many opportunities have been presented to it. Currently the company is undertaking several high profile projects in the UK. The company was awarded a multi million project in London to build temporary bases for the Olympics. This is quite a big boost for the company and it intends to make huge profits from this contract. The contract was quite competitive but the company won the tender due to its outstanding performances. The company has also been contracted to upgrade the north London railway infrastructure and also the Belfast sewers. Trafalgar square is also a project constructed by Atkins. This shows that the company has a lot of potential and it will end up as a leading company in the UK (Atkins, 2012). Strategic Alliances The company has developed sustainability policies that will be useful in the operations of the organization. Several other strategies are also being drafted to ensure that the company performs better and win a bigger market share improving its ranking among the best companies in the construction sector (Fitzroy, 2005). The company aims at establishing long term relationship with its clients so as to increase its market dominance. Several other policies are being put in place in order to improve the services offered to the clients. The company is in the process of adopting a quality management system that is customer focused. This will help in setting up policies that will ensure that the customers are satisfied with the services offered by the company. The quality management system will also ensure that the company adopts regulations required by law and fully implement them (Nanda, 2005). This is important to the company since most of the major contracts can only be awarded to companies that have fulfilled this requirement. The management of the employees will also be easy with the quality management system in place. The company with thus be able to register high growth rate and huge profits. The company is also focusing on investing more in employees as opposed to hiring specialists who are quite costly. The company is also in the process of negotiating with its suppliers so as to come up with the most efficient modes of payment. This is considering that the prices of building materials have been increasing greatly in the recent past. This will be useful in cautioning the company against the high cost of operations. The board of directors of the company has also passed a resolution that will see the company offering other services to its clients apart from the construction. This includes venturing in the engineering field of Mechanical and electrical services. This will generate extra revenue for the company when the services in the construction industry are not picking up well (Porter, 1980). The employees serving on part time basis in the company will be trained regarding these operations and be absorbed to full time basis. This will enable the company save on the cost of hiring specialized teams to serve the purpose. With these strategies in place the company seeks to be among the best construction companies in UK. PESTEL ANALYSIS This analysis mainly involves the political, economical, social, technological, environmental and legal issues (Wordpress, 2012). According to this analysis the economic situation in the UK is quite tough and therefore the company has to be more aggressive in its operations. The political situation is however stable in the UK and may not affect the business opportunities for the company. The legal issues are tough but the company has abided in most of the requirements. The company is also enforcing carbon emission policies in its operations which is an environmental issue. Good corporate values of the company are also in line with the social aspects of the UK. According to the PESTEL analysis, it has become quite evident that the sector is facing a lot of challenges and the company is also being affected by the high cost of inflation and government regulations. As a result, the company intends to put up measures that will enable it succeed in its venture. The company is seeking partnership with any reputable company to start a joint venture. The company has also acquired several other groups including the PBSJ group in America this is mainly for the purpose of increasing its profits as well as countering the high economic crisis. The expansion of the company s unlikely at this stage but future plans are being put in place so as to enable the company to extend its services to other parts of Europe and the world over. This will be important in increasing the market share and hence the profitability of the company. Recommendations and Conclusion According to the paper, the company has a lot of potential as well as challenges. The company therefore needs to prioritize its operations so as to beat the challenges. The company should come up with a method of ensuring that it has all the records of its employees both part time and permanent. This will be useful during the budgeting process. The method of employee selection should be reviewed and a better one is put in place. The company should only employ a number that it can handle at any given time considering the inflation rate. The strategies that have been put in place by the company should be fully implemented. This is mainly because they are good and will be beneficial to the organization. The company should also ensure that it have diversified its operations so as to generate more revenue. Due to the good public image of the company, it will greatly benefit from offering other services. It will not face a difficult time during marketing as the company is already well known. The company should also ensure that the quality management system is fully implemented. However, for it to be successful, it is recommended that the company should involve experts. This is mainly for the purpose of training the staff and giving expert advice in any area that may require expertise. The quality management system should also be viewed as a continuous improvement process. Once the targets have been achieved the process should continue and new targets set. In conclusion, it is evident that Atkins is a huge investment with a lot of returns. It is also evident that the company has won the praise from many clients and as a result it is always warded multi-million tenders. This therefore means that the company has a bright future. However to accomplish this, the company must beat all the odds facing it as discussed in the paper. The recommendations should be adopted by the company to ensure that it becomes a major competitor in the industry. It is worth noting that the company has maintained a high standard of safety and has avoided penalization. Bibliography Atkins, (2012). http://www.atkinsglobal.co.uk/projects/750v-migration-feasibility-study Wordpress, (2012) Pestel analysis http://pestel-analysis.com/ Nanda, V, 2005. Quality management system handbook for product development companies. New York: CRC Press. Pollock, I. 2010. Will house prices fall or rise in 2011? Retrieved on March 12, 2012, from Helm, T. 2011, Oil prices: Urgent steps needed to wean UK onto other energy sources, MPs say. Retrieved on March 12, 2012, from Fitzroy, P., et al 2005. Strategic management: creating value in turbulent times. Chichester : Wiley. Cavaglieri, C.et al 2011. How to beat inflation – an investor's guide. Retrieved on March 12, 2012 from Porter, M. 1980. Competitive strategy: techniques for analyzing industries and competitors. Free press New York Carmona, M. et al. 2004. Measuring quality in planning: managing the performance process. London: Taylor & Francis, Read More