Fletcher Construction: Mobilization Risks and Strategies Analysis

This report provides a comprehensive analysis of Fletcher Construction's potential international expansion, focusing on the construction market in Asia. It begins by describing Fletcher Construction's core business, capabilities, financial standing, and current market offerings. A PESTEL analysis is then conducted to assess the political, economic, social, technological, legal, and environmental factors influencing the construction market in Asia. The report identifies and develops a risk matrix for mobilization risks, including staffing, logistics, health and safety, materials supply, and cost and program control. Key tasks and activities to mitigate these risks are outlined. Finally, the report discusses strategies to transition Fletcher Construction's current business model to incorporate operations in the target country, offering recommendations for successful internationalization. The analysis is based on the assignment brief provided, addressing all required aspects for a thorough understanding of the international construction market and the challenges and opportunities it presents.

Running head: INTERNATIONAL CONSTRUCTION
International Construction Analysis of Fletcher Construction
Name of the Student:
Name of the University:

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Table of Contents
1. Introduction.........................................................................................................................2
2. Identify and describe the company based on core business, capability, financial
capability and current market offerings.....................................................................................2
3. Selection of country where the company is mobilise.........................................................4
4. Development of matrix identifying the mobilization risks.................................................6
5. Identify and describe key tasks and activities need to put in place in order to minimise
these mobilisation risks............................................................................................................13
6. Discussion of strategies appropriate to take the company from current business model to
target company.........................................................................................................................17
7. Conclusion........................................................................................................................19
References................................................................................................................................20

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1. Introduction
The report is based on leading Construction Company which is operating in New
Zealand. The selected company for this study is Fletcher Construction. The report discusses
on the international construction market as part of the company efforts in order to
internationalise its business model. The core business, capability, financial capability and
current market offerings of Fletcher Construction is discussed in this study. PESTLE analysis
is performed into the current market situation to analyze its external and internal business
functions in other country where it is wished to mobilise. The key activities is identified for
minimizing mobilization risks into the company. Finally, main strategies are also discussed
which are accurate for taking the company from its current business models.
2. Identify and describe the company based on core business, capability, financial
capability and current market offerings
The selected company for this study is Fletcher Construction, which is the business
unit in Construction Division of Fletcher Building Limited, which is listed on the stock
exchange market of New Zeeland and Australia. The company is structured into four business
units which are managed by the General Manager and senior leadership teams. The core
business units of this construction company is building and interiors, south pacific as well as
infrastructure. In recent years, the company has expanded with acquisition of Higgins, which
is a leading construction company designs, constructs as well as maintains the road and
infrastructure (Fletcher Construction, 2019). The construction company consists of 20,000
employees with its market capitalization of Fletcher Construction is around $9 billion. The
three business units of Fletcher Construction are summarized as below:
Fletcher Infrastructure: It has completed various iconic infrastructure as well as
transport projects in market of New Zealand over years included roads, railways, bus

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connections stations, waste water services, bridges and others (Fletcherbuilding, 2019). This
business unit is a foundation of the problems and solve the customer’s requirements while
managing key designs delivery and other construction tasks.
Fletcher South Pacific: It is active in South Pacific since the year 1946, By means of
building of collaborative relations throughout South Pacific islands, the construction
company becomes leading in quality builder into the particular regions
(Fletcherconstruction.co.nz, 2017).
Fletcher buildings and interiors: The leading construction company has undertaken
works widely in usage as well as scale in the main structures plus commercial interior fit
outs.
The financial capability of Fletcher Construction is that there is total sales of
approximately $3,468 million, and the revenue of the company for financial year of 2017 is
$9,471 million and net earnings are $(190) million. The capital expenditure is $304 million
with customer engagement is 70% (Fletcherconstruction.co.nz, 2018). The largest company
of New Zealand, Fletcher Building had a year loss of $190 million. It compares a profit of
$94 million in the financial year of 2017. The gains are more than offset by increasing in
costs as well as the company is required to invest for meeting higher than anticipated market
demands, As per the company, there are losses into the building and interior divisions which
are maintained at $660 million which was announced to market in the year 2018.
The current market offerings of the company are product innovation, service and
channel innovation, productivity of labor as well as global supply chains. The company is
offering green as well as efficient buildings work with regulation along with charging the
customer’s preferences drive innovation into energy efficiency buildings
(Fletcherconstruction.co.nz, 2017). In service and channel innovation, there is growing in

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personalized service expectations with the customers are interacting with brand. They are
offerings new low cost entrants and digital services plus online purchasing for the customers.
The pre-assembled structures of buildings will lead to reduce need of onsite labors and it
speed us the construction time. Finally, in global supply chains, there is low cost country
sources for inputs which can continue to present larger cost reduction opportunities
(Fletcherconstruction.co.nz, 2018). There is also globalization competitions from low cost
country producers as well as western players.
3. Selection of country where the company is mobilise
The Construction Company is like to mobilise in Asian countries. Asia is the largest
continent in entire world with a surface area greater than 8.7% of the Earth. It hosts close to
4.3 billion of individuals with ranked a leading continent in the total population growth rate.
The continent is being characterized based on various cultures, political systems as well as
economic systems in addition to physical environments (Fletcherconstruction.co.nz, 2017).
The report shows a background research of the country by using PESTLE analysis to identify
current market situations of the country so that the researcher can identify if it is better to
mobilise in the country or not. Below table will show the PESTLE analysis of Asia as:
Factors Details
Political
factors
 Most of the nations are transforming from the conservative one
party political systems to the western style democratic systems.
 Under constant pressure, the country is transformed into western
style of the governmental systems.
 It leads to promising government for foreign companies seeks to
invest into Asia. (Kırılmaz & Erol, 2017).
 The country is under one-party political system which is
suppressing efforts by means of democratic movements to changes

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into the governmental systems.
 There are significant control across Asia which can hinder entire
economic freedom.
 The country has significant lack of the true market freedoms.
Economic
factors
 Asia has rapid growth into economy.
 The country has stronger purchasing power parity and it is ranked
second after Europe in this case (Yang, 2017).
 Most of the Asian countries are overtaking various leading
economics into the world with rapid expansion of the continent
nominal GDP.
 Most of the state governments are concentrated to enhance into
economic developments.
 It creates satisfied environments in area of investments to be
flourished (Edirisinghe & Andamon, 2018).
Social factors  There are huge population which is estimated to be 4.3 billion.
 The country gas strong human development index which is
enhanced by improvements into the healthcare, educations and
economic factors (Shin & Song, 2015).
 There is an increase per capita incomes.
 There is significant differences into social classes.
 The firms are located into areas with targeted population for
success into the business.
 Asia has ethical groups as well as cultural practices across the
regions.
Technological  There is intensive networks of the roads as well as inroads.

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factors  There are easier, faster as well as convenient transport to the
interior regions in order to reach people residing into the rural
areas.
Legal factors  Asian countries has well reformed legal systems.
 It can seek to promote justice throughout equitable distribution of
their resources.
 There is establishment of the special courts for settling special
cases into the society.
 There are informal judicial systems where there are solving of
disputes by the local governments into most of the states (Yang,
2017).
 There are localized system which can corrupt as well as
discriminatory: inconsistent with the constitutional rights.
Environmenta
l factors
 There are diverse into the climatic features.
 Asia has attractive physical features for the tourism industry.
 Asia is rich into supply of the natural resources (Shin & Song,
2015).
 Most of the potential investment sources opportunities for the
multinational plus industries.
4. Development of matrix identifying the mobilization risks
While mobilization of the company from one place to other, there are various risks which
are required to manage in establishing new construction business into the target company
which is Asia. Risk matrix is provided in this section where all possible risks are identified
along with its mitigation steps and likelihood as well as consequence of occurrence.

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Following are the risks which are caused due to mobilisation of business of Fletcher
Construction from New Zealand to Asian countries.
a. Staffing
In order to mobilise the business of Fletcher Construction from New Zealand to Asian
countries, there is risk of staffing of the resources. There are lack of project staffs those
have experience and knowledge of company mobilization. People those are involved in
mobilization should have proper knowledge of the country where there are desiring to
mobilise the business (Trauner et al., 2017). There is lack of trained and skilled
professionals across the construction industry dealing with the work. This threat can
provide effect on growth of the business and its profitability. At first, the resources should
have idea where they are mobilise the construction business and if it would be helpful for
the company based on its revenue, market share and profitability. The staffs should
require to maintain security plus maintenance of the business in other country (Tesfaye,
Berhan, & Kitaw, 2016). Therefore, in order to manage risks regarding staffing, the
construction company should hire those resources who have proper knowledge as well as
experience to work in this field.
b. Logistics
At the time of mobilization of the business, logistics risk is a concern and threat to the
construction business because of increase into regulatory threats. In this case, it is critical
to conduct the business in other country and engage of the suppliers as well as contractors
in other country to deliver the products and services to that country (Bazlamit, 2018).
Mobilisation of a business is totally based on managing of the construction products and
equipment’s into the supply chain. Due to global economic downtown, the cost of holding
inventory can rise from 25% to 60% for the items into the inventory for over in a year.

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Weak planning as well as poor forecasting lead to failure into inventory. Those risks are
managed by proper selection of the suppliers those have experience to work in the
construction field (Bahamid and Doh, 2017). The risks are also managed by selection of
best warehouse plus distribution solutions so that cost of holding inventory is not
damaging the business of Fletcher Construction.
c. Health and safety considerations
In order to mobilise the business from one country to other, health and safety risk is a
concern for the business as it might occur when people are exposed to the hazards. It is
required to manage either by management and elimination of the risks. It is occurred
when there is poor code of health and safety and health regulations implemented into the
organization (Ansah & Sorooshian, 2017). The hazards are occurred due to unsafe use of
the manual handling of the project tasks, unsafe use of the construction machineries and
equipment and use of electrical plant in wet areas. Those risks are managed by inspecting
the workplace as well as observation of how the tasks are to be performed. The workers
should be consulted related to health as well as safety problems those are encountered to
perform the work (Vidivelli & Jayasudha, 2016). The construction company should
implement and prepare a proper health and safety policies into the organization so that the
workers can strictly follow it to avoid any types of health and safety hazards into the
workplace where they are worked and involved.
d. Materials supply
The risk related to material supply is caused due to shortage as well as delay in
materials supply along with unstable supply of the raw materials. Shortage as well as
delay into the materials supply can cause problems like delay in mobilisation of the
construction project delivery to other country (Ebrahem, 2017). Shortage of the materials

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are related to availability of the construction materials. Poor estimation of the material
quantity causes shortage of the supply and oversupply. It can disrupt the progress of the
construction work and mobilisation work on the sites. It causes additional cost and delay
into the plan (Rubio, Serpell, & Ferrada, 2018). Materials of supply risks are managed
throughout proper management of the resources and materials which are required to
mobilise the business from one place to other. The operation manager should identify
proper estimation of the materials quantity and materials required for the project plan.
e. Cost control
Cost risk is occurred when the project cost becomes more than its budgeted cost. It
leads to performance risk of the project when there is overrun of the project cost, it can
lead to reduction of both scope as well as quality (Sui et al., 2018). Cost risk can lead to
increase into the project schedule due to extend in one of the activity time, it can cause
delay into entire project scheduled time and causes project delays. Cost risks is caused
when the construction industry has not enough funds for conducting the mobilisation of
the business from one country to other and it leads to delay in project completion work. It
is managed by proper collecting of fund for the project and managing of proper resources,
equipment and machineries plus materials for the mobilisation work (Paz et al, 2018).
The financial manager can proper estimate the project cost along with all expenses
required for the mobilisation work so that it can manage over the cost and control it.
f. Programme control
Programme and compliance is always a challenge for the construction company as
they are not following a proper ethics and compliance programme for conducting their
work. Turing the compliance programme into competitive advantage is required for the
construction organization to mobilise their business to other country (Arrenvalagan &

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Mohamed, 2017). With decades of experiences into challenging jurisdictions, the
organization is not able to meet with abstract regulatory construction standards. It is
required to manage by proper implementation of compliance standards so that there is
controlling of the compliance programme (Yang, 2017). It is controlled the risks by
designing to build embedded compliance cultures so that they can adjust changing
demands of the global businesses as well as regulators.
Type of
risk
Likelihood Conseque
nce
Level of
risk
Mitigation steps Risk
treatme
nt
measure
Staffing Possible Major High risk The staffs should require to
maintain security plus
maintenance of the business in
other country. Therefore, in
order to manage risks
regarding staffing, the
construction company should
hire those resources who have
proper knowledge as well as
experience to work in this field
(Shen & Cheung, 2018).
Acceptan
ce
Logistics Possible Moderate Medium
risk
Those risks are managed by
proper selection of the
suppliers those have
experience to work in the
construction field
(Ratnaningsih, Dhokhikah, &
Fitria, 2018). The risks are also
managed by selection of best
warehouse plus distribution
solutions so that cost of
Acceptan
ce

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holding inventory is not
damaging the business of
Fletcher Construction.
Health and
safety
considerati
ons
Unlikely Moderate Medium
risk
The construction company
should implement and prepare
a proper health and safety
policies into the organization
so that the workers can strictly
follow it to avoid any types of
health and safety hazards into
the workplace where they are
worked and involved (Renault,
Agumba, & Ansary, 2016).
Acceptan
ce
Material
supply
Likely Moderate High risk Materials of supply risks are
managed throughout proper
management of the resources
and materials which are
required to mobilise the
business from one place to
other (Mali & Dube, 2018).
The operation manager should
identify proper estimation of
the materials quantity and
materials required for the
project plan.
Acceptan
ce
Cost
control
Possible Moderate Medium
risk
The financial manager can
proper estimate the project cost
along with all expenses
required for the mobilisation
work so that it can manage
over the cost and control it.
Transfer
Programm
e control
Unlikely Minor Low risk It is required to manage by
proper implementation of
Avoid