The Building Manager Leighton Holdings - Case Study Example

Table of Contents CASE STUDY: The Building Manager – Leighton Holdings 3 Executive Summary 3 CASE STUDY: The Building Manager – Leighton Holdings 5 Introduction and Problem Definition 5 Operating Principles 5 Management Principles and Change Management 6 Business Environment, Strategy, and SWOT Analysis 6 Conclusion and Recommendation 7 References 8 Appendix A: Figures 9 Executive Summary 2 Introduction and Problem Definition 2 Operating Principles 2 Management Principles and Change Management 2 Business Environment, Strategy, and SWOT Analysis 2 Conclusion and Recommendation 2 References 2 Appendix A: Figures 2 CASE STUDY: The Building Manager – Leighton Holdings Executive Summary A study has been conducted on Leighton Holdings with the objectives of reviewing and analysing engineers’ roles as managers; understanding the process of planning and organizational planning; and evaluation of the characteristics of management control including operations and financial control. The Group delivered high levels of expertise throughout all its operational sectors by the stringent application of management systems along with prudent use of IT. The Group encouraged innovation, research and development by the use of state-of-the-art technology. A comprehensive framework allowed identification of risks, pricing and management, and ensuring that adequate controls were in place and functioning for tendering and contract negotiation; design and project management; occupational health and safety; environmental management; trade practices; interest rate and foreign currency exposures; ethical conduct; gathering and release of material information; crisis management and IT disaster recovery; and business continuity planning. The Group had emphasized on creating a rewarding, challenging and safe workplace for employees with a broad skill base, competencies and experience. The Group operated in an environment influenced by the national and international economies; technology; and government and politics. The business strategy had a focus on core businesses practices; management of risk prudently; commitment to high standards of performance; and regional coverage. Wal King had to assume interpersonal roles; informational roles; and decisional roles in different circumstances. He created an environment of autonomy, where managers were encouraged to innovate and take responsibility for their business units, and the autonomy occurred within a framework of clearly defined guidelines and financial parameters. The Group has demonstrated that sound business strategy and good management of financial resources could withstand different economic climates. Sound technical and financial resources; effective policies and practices; well experienced management team; low geographical risk; and high quality work were strengths, and lack of business relationships with property developers in Asia was the Group’s weakness. Infrastructure projects and M&A offered opportunities in China, India, and the Middle East. Strong competition from local players; lack of transparency in contract awards; and preference for local companies were threats. The Group must comprehend business practices in these regions, and participate with the understanding that local contractors would be given preference and the contract award processes would not always be transparent. CASE STUDY: The Building Manager – Leighton Holdings Introduction and Problem Definition Leighton Holdings Limited (The Group) has building and civil engineering construction, contract mining, telecommunications, environmental services, property development and project management as its principal activities. The Group operates in property, resources and infrastructure markets in Australia, New Zealand, Hong Kong, Macau, Indonesia, Malaysia, India, Gulf, Mongolia and the Philippines. There was a need to review and analyse engineers’ roles as managers; understand the process of planning and organizational planning; and evaluate the characteristics of management control including operations and financial control. An analysis of Wal King’s role was to be conducted. This included the concept of empowerment as a way of conducting business, and how the environment shaped business in different economic situations. Also, international management and intercultural and business ethics was to be analysed for conducting business in Middle East, China and India. Operating Principles The Group (2009) has become a leader in its field by delivering high levels of expertise throughout all its operational sectors by the stringent application of management systems along with prudent use of Information and Communication Technology (ICT). Each operating company was required to prepare an ICT strategy with goals and objectives for attaining competitive advantage and support for future growth. The Group encouraged innovation, research and development for staying ahead of its competitors by the use of state-of-the-art technology. Newer, faster and competitive systems were being developed by the Group encompassing the whole of the business process. The computer aided tendering system (CATS) had been developed to provide a consistent and uniform system for preparation and analysis of tenders. A stringent cost management system allowed control of costs and schedules of projects. IT and online networks allowed data collection and transmission seamlessly from branch offices to the head office. This allowed senior financial and line managers to ensure acceptable progress, and prepare in-depth reports on projects. A comprehensive framework had been designed for ensuring identification of risks, pricing and management, and ensuring that adequate controls were in place and functioning. This included tendering and contract negotiation; design and project management; occupational health and safety; environmental management; trade practices; interest rate and foreign currency exposures; ethical conduct; gathering and release of material information; crisis management and IT disaster recovery; and business continuity planning. One of the Group’s strengths was the ability to manage complex projects with a focus on risk management. Risk factors included cost escalation; resourcing and procurement; staffing; industrial relations; design; engineering; weather; creditworthiness of clients; country risk, etc. Management Principles and Change Management The Group (2009) being a service based organization realized that their success depended on the quality of the service delivered. Leadership strength and people skills and motivation were considered crucial for performance. There was an emphasis on creating a rewarding, challenging and safe workplace for employees with a broad skill base, competencies and experience. The Group’s management strength was considered an asset. Management operated with autonomy and were encouraged to innovate and take responsibility for their business units. The autonomy occurred within a framework of clearly defined guidelines and financial parameters. Targets for financial returns were set in and strict assessment criteria were used when tendering for work. Healthy relationships were maintained within a workable negotiating framework together with a balanced and sensible approach. Financial rewards, career advancement opportunities and continual skill development were considered important motivators. The Group encouraged a safety-conscious culture and sought to be the employer of choice. The management expected that as Asian economies recovered from slowdown, the Group’s business in the region would grow. The current situation was similar to the one witnessed in 2000. Business Environment, Strategy, and SWOT Analysis The Group operated in an environment between oligopoly and perfect competition that was influenced by the national and international economies; technology; government and politics; the natural environment; demographic structure; and the social structure (Grant, 2004). According to Deloitte and Touche (2000) the business strategy could be classified into focus on core businesses; managing risk prudently; commitment to high standards of performance; and regional coverage. A focus on core business had enabled the Group to achieve solid performance in an environment that could be considered unpredictable and volatile. The Group remained profitable during the Asian crisis in 1997-98 when its competitors suffered substantial losses, and the Group had weathered the global slowdown in economies in 2008-2009. The Group had been very selective about the projects that were undertaken, and avoided the difficulties experienced by many of its competitors during the financial turmoil. The Group had gained competitive advantage over its competitors by obtaining ISO certification for quality as more and more clients had been concerned about quality, safety and environmental issues. The Group had adopted the strategy of gradual expansion into new geographic areas which had enabled it to weather the economic slowdown better than its competitors. The Group had adopted a strategy for regional coverage by establishing joint ventures, representative offices and subsidiaries across China, India and the Middle East. Diversification had allowed the Group to not only maintain a regional presence, but also helped the Group to diversify risk and achieve even distribution of turnover. The Groups strengths were sound technical and financial resources; effective policies and practices; well experienced management team; low geographical risk and well known for high quality work. The Groups weakness was lack of business relationships with property developers in Asia. There were opportunities in infrastructure projects, and M&A in Asia. Strong competition from local players; lack of transparency in contract awards; and preference for local companies were threats. Conclusion and Recommendation Wal King had to wear different hats while formulating and implementing strategies for the Group. While these roles could be considered complex as they required decision making and being responsible for them, they were not stratospheric as he had developed an effective management team that helped him make those decisions. These roles could be classified as interpersonal roles; informational roles; and decisional roles. While engaging in interpersonal roles he had to assume the roles of figurehead, leader, and liaison during different circumstances. Informational roles included monitor, disseminator, and spokesperson. The most important roles were decisional roles of entrepreneur, disturbance handler, resource allocator and negotiator (Hahn, 2007). Wal King created an environment that operated with autonomy, and managers were encouraged to innovate and take responsibility for their business units. The autonomy occurred within a framework of clearly defined guidelines and financial parameters. The Groups stock price increased from 8$ in 2004 to 65$ in 2008, decreased to 16$ in early 2009, and bounced back to 38$ recently. This performance is in tandem with the global economic performance. However, it is noteworthy that while many of the developed economies shrunk to recession, the Group had maintained positive revenue (0.4$ in 2004, 2.1$ in 2008, and 1.5$ in 2009) and continued to pay dividends (Corporate Information, 2009). Having been through boom and bust economic cycles, the Group has demonstrated that its bedrock of business strategy could withstand different economic climates. The business strategy encompassed financial; customer; business processes; and growth and change management. As the Asian (China, India and Middle East) economies emerge from the slowdown earlier, there are opportunities to participate in several infrastructure projects as there are a large number of infrastructure projects under planning by these Governments. The Group’s good relationships with officials in the public sector would be beneficial. Also, there are many projects in the Middle East that are in a state of abandonment providing value based M&A opportunities. It is recommended that the Group fully comprehends and participates in the businesses in these regions with the understanding that local contractors would be given preference and the contract award processes may be complex including requiring lobbying. The Group would face tough competition from the local companies, and would have to be cognizant of currency fluctuations that could cause errors in estimations. References Corporate Information. (2009). Leighton Holdings Limited. Available: http://www.corporateinformation.com/Company-Snapshot.aspx?cusip=C036EX430. Last accessed 23 November 2009. Deloitte & Touche Corporate Finance Ltd. (2000). Business Evaluation. Available: http://www.leighton.com.au/verve/_resources/AR_Report_pt2.pdf. Last accessed 25 November 2009. Grant, R. (2004). Industry Analysis: The Fundamentals. Available: http://www.blackwellpublishing.com/grant/pdfs/CSA5eC03.pdf. Last accessed 25 November 2009. Hahn, M. (2007). Managerial Roles. Available: http://www.en.articlesgratuits.com/managerial-roles-id1587.php. Last accessed 25 November 2009. Leighton Holdings Ltd. (2009). Operating Principles. Available: http://www.leighton.com.au/about_us/operating_principles/our_people.html. Last accessed 25 November 2009. Appendix A: Figures Figure 1. Leighton Holdings Financial Performance (Corporate Information, 2009) Figure 2. Industry Environment (Grant, 2004) Figure 3. Business Environment (Grant, 2004) Figure 4. Business Strategy (Deloitte & Touche Corporate Finance Ltd, 2000) Figure 5. Porters Five Forces (Grant, 2004) Figure 6. SWOT Analysis (Deloitte & Touche Corporate Finance Ltd, 2000) Read More