Fletcher Building: Strategic Objectives, Performance & Recommendations

This report provides a comprehensive analysis of Fletcher Building Limited, evaluating its strategic management functions, resources, and performance against its strategic objectives. It examines the company's business strategy, including its focus on decentralization, employee engagement, technological innovation, and strategic capital investment. The report critically appraises the organization's resources, such as its human capital, diversified product range, and technological capabilities. It also assesses the company's management structure, economic and financial performance, human resource practices, technological reforms, and sustainability efforts. The report identifies crucial areas for attention, such as market share and the performance of the building and interiors division, and offers recommendations for realistic strategies, including focusing on smaller construction projects, cost reduction, market diversification, and mergers and acquisitions in the technology sector. The analysis concludes that Fletcher Building must proactively reform its business strategies to address the challenges of the changing business environment.

MANAGEMENT
BUSINESS

REPORT 1
Table of Contents
Introduction................................................................................................................................2
Business Strategy and Strategic Objectives...............................................................................2
Critical appraisal of the organisation’s current resources and capabilities................................3
Overall conclusions about the entity’s performance and capacity against the strategic
objectives of the business...........................................................................................................4
Management Structure Analysis............................................................................................4
Economic Performance Analysis...........................................................................................4
Financial Performance Analysis............................................................................................5
Human Resource Analysis.....................................................................................................5
Analysis of Technological Reforms.......................................................................................6
Sustainability and Corporate Social Responsibility Analysis................................................6
Identification of crucial areas for attention of the entity............................................................6
Recommendations detailing realistic strategies for Fletcher Building......................................7
Conclusion..................................................................................................................................7
References..................................................................................................................................8

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Introduction
With the increasing global competition, the organisations are consistently facing the
pressure to devise the efficient set of organisational strategies and to deploy its resources in
the best means possible, to enable the entity achieve its objectives and serve its stakeholders.
The report is aimed at evaluating the various aspects of the strategic management functions
and components of the entity “Fletcher Building Limited.”
The company is a significant employer, home builder, manufacturer, and partner on
major infrastructure and construction projects (Fletcher Building, 2019a). The company’s
foundation was laid down in the year 1909, when James Fletcher had built his first house
with Albert Morris in Dunedin, New Zealand. Currently the company has its significant
operations in Australia, together in Europe, the USA, and Asia. The Fletcher Building is
dually listed on the New Zealand Stock Exchange and the Australian Stock Exchange and
operates through eight divisions.
Some of the aspect that would be analysed in the report would be the current
resources of the entity, including the human resources and performance and capacity on the
lines of the strategic objectives. Further, the crucial business areas would be identified. The
report will conclude with the recommendations based on the realistic strategies that can be
employed by the entity.
Business Strategy and Strategic Objectives
The entity states its chief strategic vision is to be the undisputed leader in New
Zealand and Australian building solutions markets, driven by the products and distribution of
the components.
Some of the chief elements of the strategic objectives of the company Fletcher
Building are listed as follows. Firstly the company follows a simple and lean decentralised
operating model and strategizes to make the said model to be even simpler and leaner.
Secondly to state, the company seeks to engage highly capable people who deliver results for
our consumers. The third chief element that comprises of the business strategy of the
company is the close affinity with the technological innovations and taking advantages of the
global trends on the same lines. Fourthly to state is that the company engages to direct its
capital investment in the strategically important, high-return businesses that are in the same
alignment with the overall vision of the company. Lastly, it must be noted that the company

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engages in significant acquisitions coupled with the organic growth in terms of the
partnerships with the local suppliers, as an attempt to fill the gaps in the supply chain or to
expand in the adjacent business categories.
In the financial year 2018, the company stated its new business strategy to improve
the performance by focus and simplification of the business (Fletcher Building, 2019b). The
launch of the new strategy was following the deteriorating performance in the Building +
Interiors (B+I) business of the company’s construction division. The highlights of the
business strategy of the entity are defending and growing the New Zealand building products
and distribution businesses, stabilising the Construction division, seeking significant
improvements in the operating and financial performance of the Australian business and
exiting from the non-core businesses.
Critical appraisal of the organisation’s current resources and
capabilities
The company’s one of chief resources its efficient human resource capacity from top
to bottom. The company is headed by a strong and diversified board comprised of six
Independent Non-Executive Directors. The board of directors possess key qualification and
experience essential to stir the growth and long term success prospects of the entity. The
board is further complemented by the executive team of the entity for responsible overseeing
the business operations. The key positions in the executive team of the entity are the Chief
Executive Officer, Chief Financial Officer, Chief People and Communications Officer,
Group General Counsel and Company Secretary, Chief Executive Building Products, Chief
Information Officer, Global Head Environment Health and Safety (EHS), Chief Executive
Distribution, Chief Executive Steel, Chief Executive Concrete, and the Chief Executive
Residential and Development. There is an equal consideration of needs and aspirations and
recognition of the value of the employees other than mentioned above.
The company has a wide spread of products to offer to varied range of customers,
which is it’s another vital resource. The company’s operations are divided into key eight
divisions namely the Building Products, Concrete, Distribution, Steel, Construction,
Residential and Land Development, Australia and the company’s offshore Formica
businesses. A glimpse of diversified organisational structure and product range is provided as
follows.

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(Source: Fletcher Building Limited, 2019b).
One of the chief supporting resources of the entity can be stated to be technology. The
company has been consistently engaging in the investments in the technologies and
innovations and the large base of customers.
Overall conclusions about the entity’s performance and capacity
against the strategic objectives of the business
Management Structure Analysis
It is significant to note that the entity follows a decentralisation model of management
for its business operations backed by information and control systems, which is best suited
for the large scale and extensively diversified operations, as the responsibility is delegated to
the various managers (Boddy, McCalman, & Buchanan, 2018). Thus, the decentralised
management is a positive aspect of the entity’s performance in respect to the strategic
objectives. The eight divisions of entity makes the management of operations efficient and
delegation of the authorities for the same does not concentrates power in one hand.
Economic Performance Analysis
Economic indicators are crucial to assess the business performance of a global entity
(Schaltegger & Wagner, 2017). From the economic point of view, the performance highlights

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of the company are depicted as follows. The entity is known to be one of the largest
companies of New Zealand both in terms of revenue and employment. As per the
independent survey conducted by the New Zealand Institute of Economic Research (NZIER),
it is significant to state that the company Fletcher Building contributed $1.5 billion to
New Zealand’s 2017 total GDP of $264.7 billion. The economic performance of the entity
amounted to an approximate of 0.6% of national GDP. Thus, it can be stated that the entity’s
performance provided a significant boost to the country’s economic activities, together with
positive impacts in the retails segments such as the construction services, owner occupied
property operation and others. In addition, the company has led to a number of job creations,
increased household consumption and payment of the taxes.
Financial Performance Analysis
Financial performance is a vital indicator of the efficiency of utilisation of the varied
resources of the entity (Saeidi, Sofian, Saeidi, Saeidi & Saaeidi, 2015). An insight of the
financial year 2018 performance has been provided as follows. It is quite evident that the
most of the divisions of the entity are performing below, as compared to the last year
performance benchmarks. Except the distribution division and the residential and
development division, the performance of all the braches is deteriorating. It is also significant
to state that the entity’s operating margins of these margins are consistently on fall.

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Human Resource Analysis
Another positive aspect of the entity’s performance is the consideration of the
stakeholder needs by the managers (Veliu & Manxhari, 2017). The company has wide range
of stakeholders and company is actively engaged in addressing the issues and needs of each
category of them. For instance, in terms of the human resource capacity of the entity, the
entity is actively engaged in providing training and development opportunities to its
employees through its various range of training programmes in leadership, health and safety,
operational excellence, sales force effectiveness, and customer excellence. For instance, for
the financial year approximately 38000 individuals participated in the entity’s various
programmes. In addition, the entity provides 5 customised leadership programmes to enhance
the leadership capacities of the leaders of the entity. The result of the performance is wide
visible in the form of group engagement score reaching to 70 percent in the financial year
2018.
Analysis of Technological Reforms
In terms of technological innovations, the company recently developed and proved a
panelisation solution in the financial year 2018. The level of automation enabled by
panelisation solution would benefit the company in terms of reduced wastage, enhanced
quality and is a significant solution to bad weather leading to problems in construction.
Sustainability and Corporate Social Responsibility Analysis
Sustainability and CSR practices are an important means to analyse the social
performance of the entity as a whole (Crowther & Seifi, 2018). The entity Fletcher Building
is stated to be engaged in the active community services, by engaging in donations,
volunteering services, advising and facilitating workshops, and other incidental activities.
The recipients of financial assistance are the organisations from varied fields such as mental
and physical health organisations, local community sports clubs, local city missions. In
addition, cultural training sessions, language lessons and diversity programmes are
undertaken for the community. Further to state the entity very well embeds the sustainability
practices in the entity’s operations which is the prime need of the business operations of
today.
Identification of crucial areas for attention of the entity
One of the chief area for consideration of the entity is it’s not so significant market
share in the New Zealand and Australian markets, in spite of its strong backing of the

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financial, technological and other resources. The area is additionally crucial because of the
fact that these markets itself are not witnessing much growth in recent years. It is essential to
note that as per recent data, the company has only 15 percent share of the New Zealand
market and 1 percent in Australia (Beckford, 2018).
Another crucial area for attention by the entity is the building and interiors division
which had sustained a whopping loss of $660m loss leading to overall fall in the financial
performance (Harris, 2019).
As a result if the entity does not engages in significant steps for the market
penetration, it can lead to falling in its market share even more.
Recommendations detailing realistic strategies for Fletcher Building
Some of the recommendations of the strategies for the company are listed as follows.
As the entity has recently suffered deteriorating performance especially in the building
division, the entity is further suggested to pay attention on the same. The entity is suggested
to concentrate on the smaller construction projects and also to cut costs in operating
activities.
The entity is further suggested to pay attention and capture new markets other than
New Zealand and Australia. It is significant to note that there are huge challenges of stability
in construction and property industry. This would allow the entity to balance its overall
performance and if one of the markets is not stable and because of the same, the entity is
performing below par, the same can be balanced by the market of other regions.
The entity is further recommended to engage into mergers and acquisitions with the
organisations in the field of technological innovations in construction sector, so as to reduce
the operating costs of the same.
Conclusion
As per the discussions conducted in the previous parts it can be concluded that as
there is increasing number of changes in the social, political and other dynamics of the
business environment of the global entities, the organisations increasingly must follow a
proactive approach by consistently reforming their existing business strategies and
introducing the new strategies to address the challenges. The above work attempted to
describe the procedure. The first step is to evaluate the overall objectives and vision, the next

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step is to examine the current resources and the performance yield of the same. The final step
is to analyse the gaps and devise the strategies as a response to the challenges. Thus, it can be
concluded that consistent evaluation and striking a balance between the strategies and the
resources is quite essential for long term success.

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References
Beckford, G. (2018). Heavy losses force Fletcher Building back to basics. Retrieved from:
https://www.radionz.co.nz/news/business/360101/heavy-losses-force-fletcher-
building-back-to-basics
Boddy, D., McCalman, J., & Buchanan, D. A. (2018). The new management challenge:
information systems for improved performance. UK: Routledge.
Crowther, D., & Seifi, S. (Eds.). (2018). Redefining Corporate Social Responsibility. Emerald
Group Publishing.
Fletcher Building Limited. (2019a). About Us. Retrieved from:
https://fletcherbuilding.com/about-us/
Fletcher Building Limited. (2019b). Annual Report 2018. Retrieved from:
https://fletcherbuilding.com/assets/4-investor-centre/annual-reports/2018-annual-
report.pdf
Harris, C. (2019). Fletcher Building back in the black but feeling the heat in Australia
Retrieved from: https://www.stuff.co.nz/business/property/110720743/troubled-
fletcher-building-back-in-the-black-for-first-half
Saeidi, S. P., Sofian, S., Saeidi, P., Saeidi, S. P., & Saaeidi, S. A. (2015). How does corporate
social responsibility contribute to firm financial performance? The mediating role of
competitive advantage, reputation, and customer satisfaction. Journal of business
research, 68(2), 341-350.
Schaltegger, S., & Wagner, M. (2017). Managing the business case for sustainability: The
integration of social, environmental and economic performance. UK: Routledge.
Veliu, L., & Manxhari, M. (2017). The impact of managerial competencies on business
performance: SME’s in Kosovo. Journal of Management, (1), 30.