Proposal for Change | Case Study Report

<Name of your company>
Proposal for Change
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Principles of Change Management - Assessment 1 - Business Case for Change - Block 2 - 2018 Page 1 of 18

1.0 EXECUTIVE SUMMARY/PURPOSE
This document introduces a proposal to review the operations and structure of Fletcher Building Ltd. The
company has been going through non-existent profit for the last 5 years. There are many issues in the company,
among which old and obsolete second-hand machineries, rapidly increasing maintenance cost and high employee
turnover are major ones. This review will propose a change management plan for the company to improve its market
position and business performance. Environment analysis, cost benefit analysis and risk analysis will be performed
to assess the current condition of the company and how the issues can be overcome. A communication and
consultation plan will also be presented to plan and implement new changes. This review takes into account the
need to implement changes in different departments and resource allocation to bring improvement in the business
performance of the company and increase profit and market share in the coming years.
2.0 BUSINESS OUTLINE
This report presents a change management plan for Fletcher Building Ltd., the biggest building material company in
New Zealand, with a market capitalization of more than NZ $4 billion. It is operating for the last 20 years and has
experienced extreme growth for the first 15 years. It has two sites in Auckland and Hamilton and has around 400
employees.
The mission of the business is that they are committed to create sustainable values for the shareholders, to deliver
the best quality products and services for the customers and to meet or exceed the reasonable expectations of the
stakeholders (Fletcherbuilding.com, 2019). Vision of the company is to perform hard work and offer ingenuity and
commitment to the business, while ensuring the safety, diversity, and sustainability and the five core values –
customer leading, better every day, play fair, better together and be bold (Fletcherbuilding.com, 2019).
The current and future market for the company includes the real estate and all other types of clients with
construction needs.
For the first 15 years, the company witnessed increase in production and sales in both regions by around 2% year on
year. However, for the last 5 years, the company has seen almost non-existent business growth.
The past performance of the company has earned it reputation in the building material supply industry of New
Zealand and surrounding countries. Among the rivals, this company also aims to deliver sustainable solution to the
consumers and reduce environmental impact, which makes it special in the market.
2.2 PROBLEMS IN MANUFACTURING EQUIPMENT AND HUMAN RESOURCES
The core manufacturing equipment in both the locations were bought second hand 20 years ago when the company
was being established. Thus, the equipment were already worn out at the time of starting the business. Although,
this is a cost reduction strategy, often adopted by many firms while setting up, however, once the company is
established with higher turnover, then the management should replace the old machineries with more sustainable
Principles of Change Management - Assessment 1 - Business Case for Change - Block 2 - 2018 Page 2 of 18

and advanced equipment for long-term growth and profitability. Fletcher Building Ltd. did not replace the
machineries earlier as that would incur a big amount of cost. They continued their operations with the old and
depreciated machineries and hence, over the years, their maintenance bills kept on increasing.
Furthermore, 20 years back the issue of sustainability was not prevalent as it is in today’s world. The technologies
were also not much advanced to implement sustainable manufacturing and other business practices. The
depreciated second hand manufacturing equipment purchased and used by Fletcher Building Ltd. over two decades
date further back and hence, those are not environment-friendly. These equipment are not suitable in the modern
world, when almost all the industries are moving towards installing environment-friendly manufacturing equipment
and implementing sustainable business operations for reducing the environmental damage. Lack of sustainable
equipment and practices affect the business reputation and performance for the firms. This is a big issue for Fletcher
Building Ltd. and hence, to revive their business growth and reputation, it must replace the old machineries with
new and advanced equipment, which would be more efficient as well as environment-friendly.
Apart from the manufacturing equipment, the company is facing the issue of high turnover of the employees of the
Design and the Maintenance Engineering departments. It has been observed that skilled and experienced
employees of these two departments are leaving the company. The reasons include lack of motivation, lack of
proper and advanced equipment to work with, lack of productivity due to inefficient and worn out equipment, and
continuous back and forth travelling to the Auckland location from Hamilton for maintenance issues of the
manufacturing equipment. High turnover of skilled and experience senior employees is not beneficial for any
company as that would reduce their performance level as well as reputation. Hence, it is a major concern for
Fletcher Building Ltd. to reduce the employee turnover in these two departments to regain their business growth
and reputation.
Principles of Change Management - Assessment 1 - Business Case for Change - Block 2 - 2018 Page 3 of 18

3.0 THE CASE FOR CHANGE
The company has been experiencing a sharp fall in the business growth in the last five years, and it is assumed that
in 2019, Fletcher Building will face a loss of NZ $2.9 million. It has also been observed that there is increased
competition from the rivals in New Zealand and in the offshore. Moreover, the company is also facing the challenge
of continuously rising maintenance bill as majority of the manufacturing equipment are old and also lack
sustainability as these are not environment-friendly. There is also risk of experienced and skilled employees leaving
the company, which would affect its growth rate further. Thus, the company should adopt changes in its operations
and equipments, so that the profitability can be increased and it gains back its position in the competitive market.
3.1 RISK ASSESSMENT - BENEFITS ASSOCIATED WITH MAKING THIS CHANGE ARE
It is anticipated that the following benefits will arise from making this change. They are:
 A positive business growth
 Gaining back the market position in comparison to the rivals
 Increased sustainability in the projects delivered
 Reduction in maintenance cost
 Reduction in skilled and experienced employee turnover rate
3.2 RISKS ASSOCIATED WITH MAINTAINING THE STATUS QUO
There are a number of risks to us as a Company if we do not make this change. These are:
 Further increase in the maintenance cost
 Lack of sustainable solutions to the consumers and increase in environmental impact
 Increase in employee turnover
 Rise in financial loss
 Fall in the market position for Fletcher Building
 Fall in reputation and goodwill
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