Strategic Management for an Engineering Company

Topics: Building, Construction, Architect Pages: 13 (4684 words) Published: April 9, 2012
InterservePlc is a services, maintenance and building company based in the UK with revenue of £1.9bn with a workforce of 50,000 people worldwide. The company is primarily engaged in providing building and maintenance services for its clients. It also offers services such as consulting, equipment hiring, project and facilities services. It provides these services for a varietyof infrastructure such as waterworks, roads, bridges, industrial plant, airports, shopping centres, offices, schools and hospitals. It mainly operates in the UK and the Americas with projects in the Middle East, Africa and the rest of Europe. The company was formerly known as Tilbury Douglas Plc and changed its name to InterservePlc in 2001. Interserve was founded in 1884 with its headquartered in Reading, the United Kingdom. This report aims to strategically analyse Interserve Plc as a construction company, firstly by researching, investigating and analysing relevant economics and statistical data relating to the general construction industry in the United Kingdom, secondly an analysis of the competitive environment, the close competitors and their nature of their competition, then lastly an analysis of the company’s strategy and its position in the construction industry using some strategic management tools in interpreting data and statistics relating to Interserve and the construction industry as it affects it.

2.0 The Economic Climate
For a proper strategic analysis to be carried out the we would have to look at the present state of the economy, areas such as GDP, Inflation rate, unemployment rates and what the budget says in relation to the industry are taken into consideration. The United Kingdom’s economy is the 6th largest economy in the world measured by nominal GDP and also the GDP per capita is the 20th highest in the world in nominal terms (Wikipedia 2011).The British economy comprises of the economies of England, Scotland, Wales and Northern Ireland with England as the largest.

2.1 Gross Domestic Product
In the 2nd quarter of 2008 the UK economy entered into recession and exited in the last quarter of 2009 this implies that the economy suffered 6 consecutive quarters of negative growth. Within that period the UK economy shrunk by 4.9% in GDP. In the last quarter of 2010 the economy has experience a growth, theGDP is now 1.5% higher than the fourth quarter of 2009 (ONS 2011)

Source: Office of National statistics (2011)
The GDP per capita is widely used to measure the standard of living in an economy. The change in GDP would affect the demand for construction projects since construction projects tend to be linked with periods of easy credit.

2.2 Unemployment Levels
The unemployment rate for the last quarter of 2010 was 8.0% of the economically active population, up 0.1% from the previous quarter. The total number of unemployed people increased by 27,000 over the quarter to reach 2.53 million the highest figure since 1994. The number of unemployed youths (ages 16-24) has increased to 974,000 on the quarter.The unemployment rate for those aged from 16 to 24 increased by 0.8 on the quarter to reach 20.6 per cent of the economically active population, the highest figure since comparable records began in 1992 (ONS 2011). The UK’s construction industry occupies a huge sector in the economy employing over 2.1m people in various capacities (Economics Help 2010). A fall in demand for construction projects will affect the 2.1 million people involved in the industry which in turn would cause a negative multiplier effects with lower demand throughout the rest of the economy. (Economics Help 2010).

Source: Office of National Statistics (2011)
2.3 Inflation:
In the United Kingdom, CPI inflation rose to 4% in January and a further 4.4% in February 2011 well above the government target of 2% (ONS 2011). The main factors responsible for the change in CPI inflation came from; domestic heating costs, particularly gas...
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