Past Report Example

FUTURE - PREPARING FOR TOMORROW
FUTURE PLC
PRESENTATION OF BUSINESS STRATEGY
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Table of Contents
Authors and Roles 3

Introduction 4
Strategic Aims 6
Risk Management 8
Human Resource Management 13
Financial Management 20
Business Expansion 28
Business Improvement 34
Analysis & Marketing 42
Conclusion 48
References 48
Appendices 50
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Authors and Roles

Authors
Bhavin Bamboli - s151403348 - Bhavin.Bamboli@mail.bcu.ac.uk

Esra'a Ja'far Hasan Altwassi - STUDENT NO - Esraa.Altwassi@mail.bcu.ac.uk
Jerome Solomon - s16142695 - Jerome.Solomon@mail.bcu.ac.uk
Mutamed Saeed - s15142231 - Mutamed.Saeed@mail.bcu.ac.uk
Samuel Smith - s15139462 - samuel.smith3@mail.bcu.ac.uk
Timothy Diplock - s16148021 - Timothy.Diplock@mail.bcu.ac.uk
Roles
Bhavin Bamboli - Director of Risk.

Esra'a Ja'far Hasan Altwassi - Chief Financial Officer.
Jerome Solomon - Chief Executive Officer & Director of Human Resources.
Mutamed Saeed - Procurement Director.
Samuel Smith - Head of Business Expansion and Bidding.
Timothy Diplock - Director of Marketing and Strategy.
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Introduction
Future PLC is a publicly traded construction company based in Birmingham, England. A main
contracting firm that prides itself on high quality projects at the best prices predominantly in the
building & commercial and transport sectors. Initially beginning as a traditional main contractor
focussing on small and medium jobs, this year has seen Future PLC undertake design and build
projects, as well as undertaking large scale projects. Future PLC has recently transitioned from
being a domestic contractor to an international contractor, this migration is documented within this
business strategy brochure.
s the Managing Director and Human Resources Manager, the primary concern was the effective
use of human capital. The role centred on utilising the labour force of Future PLC and allocating
them in an efficient manner. The correct distribution of the workforce ensured that business
operated in a sustainable manner for continued growth. Ineffective labour was kept to a minimum
at 3% of total operations and a flexible workforce meant approximately 90% of jobs were
completed either on time or early resulting in additional bonuses and profits for the company.
Selection of competent managers also resulted in positive results.
The role of Strategic Marketing Director required analysis of future market trends and allocating
marketing effort. In order for Future Plc to carve a niche in the market and become recognised
specialists in Transport, and Building and Commercial sectors it was important to recognise
expected growth in markets and act accordingly. This created competitive advantage in expertise
and allowed Future Plc to bid more successfully and competitively.
By ensuring correct numbers of marketing personnel at optimum times throughout the task we
were able to limit costs when markets were shrinking and invest in marketing before anticipated
growth in our markets.
Finance is one of the vital and basic piece of business concerns, thus, it has a noteworthy part in
each impact of the business exercises. As a financial manager and I intended to administrate the
finance division in the virtual construction organisation with Enginuity software. During the process,
viable strategies in the finance division have been implemented. Some of these procedures are;
Identifying new work in various areas and places (UK/Overseas) by expanding the foundation of
the business to accomplish development. In addition, winning new work in a focused offering
environment and this lead to increasing profitability via productive job and overhead administration.
The business expansion department’s (B.E.D.) role is to assist the marketing department
accessing new markets across multiple sectors in numerous countries. The B.E.D. works in
conjunction with the marketing department in identifying target markets and to report on the
suitability for a strategic entry. The B.E.D. will determine a target markets suitability by researching
the potential for future projects and future potential competition, whilst undertaking a critical view of
the company’s supply chain (to name some examples). By understanding the potential for growth
compared with the potential risks, a decision is then made as to whether Future PLC will attempt to
access this market; either through acquisitions or competitive tendering.
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Procurement in construction is the organisational framework implemented by the client for the
management of design and construction of a project to obtain his tender (CIOB,2010). My role as a
procurement manager was primarily concerned with securing jobs for the company. This involved
producing an accurate assessment for the cost and risk. I understood that Procurement is
fundamentally a sequence of considered risks. The key factors that affect the procurement process
are:
I. Capital base workload limitation,

II. stay within the industry limitation in terms of jobs in progress,
III. Identify the potential rivals,
IV. client’s relationships.
We have bid for 24 jobs out of 71 identified, we won 13 jobs. However, we have lost 11 jobs, 18%
due to our poor relationship with the client and 82% due to us bidding too high compared of our
rivals. Procurement practices have improved over the course of the process, after evaluating our
performance. Period after period and analysis the reason behind losing some jobs was identifying
the constraints, the overall figures show our risk assessment was inadequate. Client relationship
was affected by our workload demand. 
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Strategic Aims
The strategic aims of Future PLC follow a path of continuous improvement through growth and
development of the business and its assets. Future PLC used the business strategy to achieve a
competitive position in the market by enhancing the strategic value of the company. Primary
elements of the business strategy followed by Future PLC observed how to improve our presence
in the UK market and concurrently explore, evaluate, and select suitability of foreign international
markets for further expansion. The overall objective of Future PLC was to maximise profits by
incorporating a number of directives to guide decision making, enhancing the company
infrastructure and fixed assets to improve the overall operating performance. The primary
objectives centred around an emphasise to lower our costs and maximise profits whilst maintaining
healthy work and cash flows. Within our strategy, we also wanted to optimise the brand of Future
PLC to acquire new business and create improved and long lasting relationships with our clients.
At the start of the management period Future PLC was achieving mediocre results and business
focus was geared towards specialising in the areas of Building and Commercial. The company had
maintained a steady stream of growth in the periods preceding us taking control of the business
with the business occupying a 12% share of the market. After analysing the previous performance
of the company, we began implementing our business strategy to begin improving our market
position. We initially continued this focus on the building and commercial sector with Build only
jobs, this was a risk averse method of growth for the business and saw a 7% increase in our
business within the first period. Having experienced this growth, the business tried a more radical
approach and increased the overall cost of bids which were tendered to clients. This saw a fall in
business revenue, market share and business confidence and we secured no jobs during this
period. Evidence from the performance report of the organisation indicated that the only reason for
job loss in bidding was attributed to the bidding rate being too high. It was also inferable that the
organisation had an adequate workforce since none of the bid loss was due to shortage of staff or
due to number of present jobs. Based on these results, we felt it was necessary to revert to our
original formulae which we had initially had great success with and followed a more risk averse
strategy. We reduced the overall cost of the bids put forward to clients in an effort to undercut rival
companies by underbidding them. We had major success with this tactic and saw us successfully
wining 54% of bids tendered. This saw growth in the market share of the business rising from 12%
to 28% of the market as well as a positive increase of the share price value from 1.21 to 1.72 a
+42% increase.
The initial focus was on bidding in the UK market however we made changes as we started having
better success with our bids and focused on expanding to international markets, the decision for
this was based on cost of labour in those countries and the size of the jobs. All bids for both
international markets and the UK were for small and medium sized jobs; the main reason being to
spread risk and maximise the use of the business capital base which typically was at over 90%
capital employed during our most successful periods and 82% overall. Utilisation of resources in an
effective manner is essential for the sustainable growth of the organisation. The jobs bid for, were
principally Building and Commercial and Transport jobs as these were the two biggest sectors; we
also started diversifying into the water and sewage sector during later periods as we realised this
was a growing area which many of our competitors had overlooked. Future PLC made a total of 24
bids and were successful in securing 13 of these, procurement losses were incurred during period
6 and 7 where we assessed and realigned our tactics to make us more competitive. The more
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competitive and diversified positioning of the business saw an overall rise in the company value of
30% due to the effective allocation of labour and the increase in jobs secured and move from being
a nationally based UK company to a globalised business generating 63% of business from
overseas markets.
We utilised investments to reduce risk and job costs within the business, because of investments
Future PLC achieved a 6% return on investments; as well as reduction in build costs of 0.46%.
Investment return can be used to decipher financial status of the organisation and can be used to
take various financial decisions (Friedlob and Plewa, 2003). Positive investment return indicates
that the profit from investment is more than the cost involved in the investments. It is conclusive
that Future PLC successfully generated income and thereby created good returns from
investments. 
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Risk Management
INTRODUCTION
In this report, the business management challenges shall be addressed. The theory that shall be
focused will be the Porter’s three generic business strategies. My company is Future Plc for the
enginuity analysis. I was given the role of Risk Manager for Future Plc in the context of the group
performance. The study shall describe in detail that Porter’s generic business strategies. It shall be
examined with respect to the construction industry in general and more specifically to the context
of enginuity in Future Plc.
1. DESCRIPTION OF PORTER’S GENERIC BUSINESS STRATEGIES

Michael Porter’s generic business strategies offers three alternatives for organisations to base their
corporate strategy. They are overall cost leadership strategy, differentiation strategy and focus
strategy (Fortenberry, 2010). These three generic business strategies are described in detail
below.
Overall cost leadership strategy – In the overall cost leadership strategy, the organisation targets
broad markets on the ability of the organisation to attain high efficiencies compared to the other
organisations in the market. They adopt different cost savings aspects in its operations to provide
the lowest prices to its customers. Products are produced for the mass market at low prices by
capitalising on the cost efficiencies obtained through the manufacturing of high volumes. For
instance, Hershey, Old Navy, BIC and Hyundai espouse the overall cost leadership strategy
(Besanko, 2010). This low-cost strategy enables in attaining sustainable competitive advantage
through greater reduction and control of administrative costs incurred. It can be obtained through
technology, curve of experience and economies of scale (Fellows and Langfold, 2013). Therefore,
the organisation offers the lowest price for the product or service in the market to attract customers
towards the organisation by showing great value for money to its customers in a better manner
than its market competitors.
Differentiation strategy– The organisations that purse the differentiation strategy charges the
customer more, as they are willing to pay for the extra value offered by the organisation for its
products or services. In addition, organisations stand out from its competitors by offering them
exemplary customer service. The organisations that implement the differentiation strategy are
Rolex, Ralph Lauren, Mont Blanc, Nikon, Godiva and Lexus (Griffin, 2012).The organisation must
have good customer perceptions and positive brand image to distinguish from others. It can offer
personalised products and services to customers based on the relationship between the customers
and the organisation. The after sales service, distribution channels and product mix also
differentiates an organisation from others in the industry. The organisation benefits form higher
quality and brand loyalty (Ferrell and Hartline, 2008). Thus, the organisation differentiates itself
from others by delivering superior value to customers through high quality products or customer
service and enforces premium prices.
Focus strategy–The focus strategy is implemented by organisations that direct their focus on a
particular set of buyers, product line or a regional market. There are two variants in the focus
strategy, namely, the focus cost leadership strategy and focus differentiation strategy. They are
considered as the hybrid strategies. The focus strategy will be successful only when there are no
industry leaders operating in the niche market and the target niche market offers growth potential
and profitability opportunities (Daft, 2010). Multi segment competitors should find it difficult to serve
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the needs of the niche market and its mainstream customers. The organisation must focus on an
attractive niche market in accordance to its capabilities and resource strengths. The focus cost
leadership strategy is followed by Fiat wherein it sells its vehicles only in Italy and a few regions in
Europe. The focus differentiation strategy is deployed by Tag Heuer that offers to active customers
rugged water-proof watches (Goldman and Nieuwenhuizen, 2013). Hence, the organisation that
employs the focus strategy concentrates on a particular region, customer segment or line of
products. The hybrid strategies can be deployed only based on the nature of the organisational
capabilities, profits in the niche market and the presence of established players in the market.
2. APPLICATION OF PORTER’S GENERIC BUSINESS STRATEGIES IN THE FIELD OF

CONSTRUCTION
Michael Porter’s generic business strategies are widely used by organisations belonging to
different industries, due to their ability to be applied in general by various types of organisations
operating in diverse sectors. However, the selection and application of the generic business
strategies by an organisation is dependent on the characteristics of the target market and the
strategic advantages possessed by the organisation (Porter, 2014). Organisations in the
construction industry have embraced modern technologies to adopt the niche strategy,
differentiation strategy or cost leadership strategy. Nevertheless, most construction companies rely
excessively only on technologies only for the computerisation of the administrative functions
instead of improving the business and technical functions. This has been attributed to lack of IT
specialists in the construction companies (Hua, 2013). In the construction industry, it is difficult for
the firms to differentiate from others, owing to the great similarity in the works performed by the
construction companies for its set of customers in the market. It forces them to compete with each
other only on the basis of price. However, this leads to destructive competition in the construction
sector with companies engaging in fierce price wars that subsequently leads to the devaluation of
the construction industry (Loosemore, 2013) .As mentioned earlier, construction companies
struggle to follow the differentiation strategy to differentiate their products and so most
organisations embed the cost leadership strategies to manage the competition in the construction
market. This has caused immense devaluation in the construction sector with most organisations
resorting to engage in price wars to maintain their competitive advantage over the organisation in
the highly competitive construction industry.
However, in recent times, it was identified that more construction companies are adopting the focus
strategy. They are doing so by focusing on a specific market niche that has offered opportunity for
growth and profits within the construction industry. This can be done by catering to the
sustainability construction needs of an increasing number of environment conscious customers
who demand environment friendly construction process for eco-friendly construction projects
(Lenz, 2010). The construction companies that follow the focus strategy offers excellent services to
its limited customers. However, it can be argued that the three generic strategies mentioned by
Porter cannot be considered to be mutually exclusive in the construction sector. This can be
attributed to construction companies serving the different customer segments and their unique
needs by adopting the most appropriate business strategy that appeals to its customers served by
the construction company (Chinyio and Olomolaiye, 2010). A study on the construction industry in
Albania highlighted that there was a positive association between the generic strategies developed
by Michael Porter and the performance of the organisation. It was also seen that there are few
organisations that still do not have a clear strategic orientation. It was clearly identified that the
construction companies that had adopted the combination strategy of the generic strategies were
more successful than those organisation that relied on the pure generic strategies put forth by
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Porter (Pulaj et al, 2015). It can be understood that most organisations belonging to the
construction industry are found to espouse the cost leadership strategy. The focus strategy is
slowly being adopted by construction companies with focus on the relatively new niche markets in
the construction sector. It was clearly highlighted that differentiation strategy was the most difficult
strategy for construction companies to implement, since there was very little scope for construction
companies to distinguish itself from others. However, it was also seen that construction companies
can garner greater success when adopting the combination generic business strategy.
3. APPLICATION OF PORTER’S GENERIC BUSINESS STRATEGIES TO ENGINUITY

Overall strategy followed by Future Plc with examples of successes and challenges
In the group assignment carried out on Future Plc, it was seen that Future Plc in order to undercut
its competitors and remain competitive in the market had priced itself very low by deploying the
cost leadership strategy. In addition, Future Plc was also looking only at the UK market for now as
part of its focus strategy and was looking to expand into international markets only later. It can be
mentioned that Future Plc has followed the focus cost leadership strategy wherein it offers the
lowest prices in the construction market in the UK. This can be attributed to the success obtained
by Future Plc in comparison with other organisations that are part of the construction industry. It
was currently looking to cater to only the UK construction market and then embark into the
international construction market only after a subsequent period after tasting success in its home
market.
On examining the success of adopting the overall cost leadership strategy, Future Plc was able to
increase by 7% the company value as well as its share price. It was also able to decrease its
overhead costs by 0.6%. It gained 6% investment returns and higher market share. Future Plc
follows the risk averse bidding strategy to ensure in its ability to successfully follow the overall cost
leadership strategy. This has posed challenges for Future Plc to have only a 54% success rate in
bidding and was losing out on more jobs, due to its high bids. The cautious approach taken by
Future Plc also resulted in the organisation not venturing into the industrial market of the
construction industry. It also caused Future Plc to offer lower dividends to its shareholders.
The study on Future Plc carried out by the organisation showed that risk management was one of
the main tasks in the commercial management of the organisation. It has a risk averse bidding
strategy. It has forged good relations with its biggest supply chain partners such as Chain and
Sprocket Engineering and National Aggregate PLC. It also has been instrumental in forming good
relationship with its different clients that includes Johannesburg Vision and Master Brewers it
serves in the UK building and commercial and transport sectors. The supply chain strategy of
Future Plc was based on effective utilisation of resources and winning competitive bids on the
basis of job cost factor. It has engineered its supply chain to lower its costs associated with the
supply chain through the effective utilisation of BIM.
SUMMARY OF THE ASSIGNED ROLE AND FUNCTIONAL STRATEGY

The Risk Manager is given the multiple responsibilities of identification and quantification of the
exposure of the organisation towards accidental loss and to monitor the Risk Management
programme of the organisation. The Risk Manager has to take adequate protection measures
through risk retention, risk avoidance and risk transfer programmes (FAO, 2007). The Risk
Manager will have to assist the Board of the organisation in the setting of policies and strategies
towards risk management. It has to educate the employees on the various risks that are faced by
the organisation. The Risk Manager has to design and review formal processes in risk
management and also create internal structures and policies for every business unit of the
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organisation (Chapman and Ward, 2012). It is clear that the Risk Manager plays a critical role in
the organisation in ensuring that all the different functions in the organisation protect themselves
against the identified and unexpected risks faced by the organisation through the Risk
Management programme implemented by the organisation.
As the Risk Manager in Future Plc, I was given the responsibility of providing a methodology for
the identification and analysis of the financial impacts of the profit and loss of Future Plc. I was
responsible for the establishment and maintenance of records for the creation of the profit and loss
of the organisation. I had to allocate the claim costs and premiums to the respective divisions and
departments of Future Plc. I took care to see that the overall claims process ensured that the
claims were settled consistently and fairly in the best interest of the organisation. I was to ensure
that there was a perfect balance between the retention programmes with insurance. I assisted in
the review of the major proposed facilities of Future Plc. In addition, I also examined the new
programme activities for the profit and loss to help in the growth of Future Plc. I kept scrutinising
the roles of the different members in Future Plc, as part of my job profile.
EVALUATION OF FUNCTIONAL PERFORMANCE AND LEARNING

At the start of the initial period, it was unclear to me the different aspects that a Risk Manager had
to carry out in an organisation and more specifically in a UK based construction company such as
Future Plc. It was through this game that I realised that there are several risks to which every
organisation is exposed to and this includes market risks, operational risks, financial risks and legal
risks. I understood that the Risk Manager must keep an eye out for potential unforeseen risks that
may affect the organisation. In the construction industry, there are risks that arise from fluctuations
in labour costs and the availability and costs that are associated with raw materials. In addition, I
saw that regulatory changes had also posed considerable risks for the organisation, especially in
terms of bidding rules. With regards to Future Plc, the risk averse bidding process adopted by the
construction company proved to be both a boon and a bane. I could see that it was a boon, since it
ensured greater success in the bidding process with close to 54% success rate. However, it
became a double-edged sword, as it also lost bids owing to high job costs to its competitors in the
market.
I was able to perceive that construction companies must be able to take on risks in order to stand
apart from its rivals in the industry. I feel that more construction companies must pursue the
differentiation strategy which I could see most organisations did not follow citing the activities in the
construction industry cannot be differentiated. I believe that technology can play a key role for the
organisations in the construction sector in delivering faster and efficient construction projects for
the clients.
CONCLUSION
The analysis of the Porter’s generic business strategies such as overall cost leadership strategy,
focus strategy and differentiation strategy showed that most organisations were found to follow one
of the three pure generic strategies within their respective industry. However, in recent times, more
organisations have been espousing the hybrid strategies. It was identified in the construction
industry that most organisations deployed the cost leadership strategy, as the construction industry
does not facilitate organisations to adopt the differentiation strategy. Nevertheless, recently
construction companies have begun to implement the focus strategy in order to cater to the unique
needs of customers in the niche target market. It is vital that in the future the role of focus
differentiation strategy and focus cost leadership strategy in the construction industry must be
assessed more in accordance to the changing requirements of the construction market. Future Plc
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had also adopted the cost leadership strategy to negate the threats of its competitors by offering
low prices. The importance of Risk Manager in Future Plc was seen, as it followed the risk averse
bidding strategy. It had enabled Future Plc to achieve higher success rate in winning bids.
However, it also meant that its high job costs have caused it to lose bids.
REFERENCES
Besanko, D. (2010). Economics of strategy. 1st ed. Hoboken, NJ: Wiley.
Chapman, C. and Ward, S. (2012). How to manage project opportunity and risk. 1st ed. Chichester,
West Sussex: Wiley.
Chinyio, E. and Olomolaiye, P. (2010). Construction stakeholder management. 1st ed. Chichester,
U.K.: Wiley-Blackwell.
Daft, R. (2010). Organization theory and design. 1st ed. Mason, Ohio: South-Western Cengage
Learning.
FAO, (2007). FAO biosecurity toolkit. 1st ed. Rome, Italy: Biosecurity Priority Area for
Interdisciplinary Action, Food and Agriculture Organization of the United Nations.
Fellows, R. and Langfold, D. (2013). Construction management in practice. 1st ed. Oxford [England]:
Blackwell Science.
Ferrell, O. and Hartline, M. (2008). Marketing strategy. 1st ed. Mason, OH: Thomson South-
Western.
Fortenberry, J. (2010). Health care marketing. 1st ed. Sudbury, Mass.: Jones and Bartlett Publishers.
Goldman, G. and Nieuwenhuizen, C. (2013). Strategy. 1st ed. Cape Town: Juta.
Griffin, R. (2012). Fundamentals of management. 1st ed. Mason, OH: South-Western Cengage
Learning.
Hua, G. (2013). Implementing IT business strategy in the construction industry. 1st ed. Hershey, PA:
Business Science Reference.
Lenz, R. (2010). Post-LBO development. 1st ed. Wiesbaden: Gabler Verlag.

Loosemore, M. (2013). Innovation, Strategy and Risk in Construction. 1st ed. Hoboken: Taylor and
Francis.
Porter, M. (2014). Competitive strategy. 1st ed. London: Free Press.
Pulaj, E., Kume, V. and Cipi, A. (2015). The Impact Of Generic Competitive Strategies On
Organizational Performance. The Evidence From Albanian Context. European Scientific Journal,
11(28), pp.273-285. 
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Human Resource Management

Within this essay, we will seek to explore the manner in which Human resource management
(HRM) was utilised in the Enginuity simulation. As well as observing these factors within the
simulation we will also examine how some of these principles apply and are displayed in the
construction industry. In order to do this, we will look at the decisions made in simulation and the
impact of these decisions; the key aim is to understand the impact of the decisions and how we
can continue on from these. I will employ several theories and models to further illustrate the
human resource attributes found at Future PLC. HRM has many definitions and can be viewed
from many viewpoints, a definition offered is that:
‘HRM is the managerial utilisation of the efforts, knowledge, capabilities and committed behaviours
which people contribute to an authoritatively co-ordinated human enterprise as part of an
employment exchange (or more temporary contractual arrangement) to carry out work tasks in a
way which enables the enterprise to continue into the future.’ (Watson, 2010)
It is understandable that HRM has many facets however we will be considering the idea of HRM
from the business operational level which is defined as hard HRM. The Hard HRM approach
measures HRM by notions of strategic control and an economic model (Truss et al, 1997). It is
more concerned with the performance systems, performance management and tight control over
individual activities, with the ultimate goal being to secure competitive advantage of the
organisation (Guest, 1995). This is what we will seek to explore in this analysis of HRM in
construction and also in Enginuity.
The two theories I will be incorporating into this study of HRM in construction is the strategic
human resource model and Atkinson's model of the flexible firm. Within Enginuity, my role was
project manager and also the HR Manager with a focus on allocation of job labour in the
simulation, there were some limitations however I will explore these in more details. The overall
performance of the team was a success as we finished first in the league tables.
The first of the models I’ll be using to examine HRM in construction and Enginuity is John
Atkinson’s model of the flexible firm (Atkinson, 1984). Atkinson's model focuses on the idea of
flexibility for the business through its Human Resource (HR) practices. Atkinson looked at a variety
of factors during the construction of his model (refer to Appendix Figure 1) such as, job loss,
uncertainty, technological change and working time; it must be noted that this model was created in
1984 and as such some of these principles are more pertinent than others in relation to the current
cultural context. The areas highlighted above, indicated that a move to more unconventional
means of employment would be required to sustain a strategic and competitive business model.
This strategic viewpoint initiated a realisation of the need for a workforce which can respond
quickly, easily and cheaply to unforeseen changes; which was certainly a key tenet for success in
Enginuity. Mouritsen (1999) using Atkinson's work presents the notion that flexibility and innovation
are indispensable to competitiveness focusing not only on the internal production processes but
also on relations to customers which once again was a requirement within the Enginuity simulation.
Atkinson in his creation of the model of the flexible firm, looked at what is Flexibility? And created
three formats of flexibility; functional, numerical, and financial flexibility. Functional aspects seek to
redeploy employees quickly and easily between tasks, such as between direct and indirect jobs.
Numerical aspects seek to quickly increase and decrease headcount according to business needs
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and is perhaps the most appropriate flexibility format in Enginuity. The final flexibility area is
financial and this seeks to match pay to the state of supply and demand and the differentials
between groups of workers. Utilising these principles, Atkinson's model provides a breakup of the
labour force into peripheral areas clustered around those at the core areas/groups of the business.
At the core the emphasis is on functional flexibility whereas the periphery focuses on numerical
flexibility, therefore as the business grows the periphery increases and takes up the slack and as it
contracts the first losses are founded in the periphery workforce. Within this essay, we will be
examining the core areas and the peripheral areas namely 2nd peripheral groups, subcontracting,
outsourcing and agency temporaries (Refer to appendix - figure A for a visual representation).
The second model which I will also look at is the strategic Human resource model (Armstrong and
Taylor, 2014) which encompasses two core ideas of the resource based view and the need for a
strategic fit. This looks at the organisation and the understanding of the strategic positioning of the
firm as means for reforming the strategy over time to meet the needs of the business. Kanter
(1984) sums it up as to ‘elicit the present actions for the future’ that is to anticipate the need for
productive change. The primary focus of the strategic human resource model (SHRM) is to
maintain a sustainable competitive advantage by utilising employees to achieve the organisations
goals. Armstrong and Taylor (2014) state that there are 3 elements to the model, firstly vertical
alignment of HR strategies and business strategies, secondly to provide a sense of direction by
clear and practical HR policies and the third objective capitalise on advantages gained through
Human resources. We will explore how the organisation strategies were matched alongside the HR
strategy in the Enginuity simulation however it must be noted that there were some limitations
therefore we will only be exploring the 1st and 3rd objectives. This will involve observation of the
qualitative aspects of labour allocation and the benefits gained in line with the organisation strategy
to achieve optimal growth. The model (refer to appendix – figure 2) also examines human capital
from a horizontal level, with a focus on social, organisational, and individual effects of HR Strategy.
We will focus mainly on the organisational aspects within Enginuity.
To fully understand the context within which Enginuity operates, it is necessary for us to observe
the general HR practices which are prevalent within the construction and further explore how
Atkinson’s model can be applied. An inherent aspect of construction is that it is an industry that is
labour intensive and the important planning of human resource allocation to any project, is crucial
in meeting future manpower requirements in order to sustain a skilled and developed workforce, as
well as maintaining competitive advantage (Wong et al, 2011). One key factor impacting labour in
the construction is levels of output. Higher levels of investment correlate to increased levels of
labour hence why during the recession levels of labour productivity were reduced (Office for
National Statistics, 2016) and therefore levels of labour also decreased. This gives rise to a need
for more flexible working practices within the sector, as labour allocation and manpower demand is
project based with many projects delivered within a largely fragmented and heterogenous
workforce. The construction industry is often focused on project based work of a determinate
duration, with economic and contractual factors influencing personnel strategies (Drucker et al,
1996). The nature of demand for projects in construction is highly cyclical and as such relates to
Atkinson’s model for the levels of flexibility required in organisation workforce to meet peaks and
troughs in the economy (Wilkinson et al, 2012).
Atkinson’s model highlights that across many industries, the need for flexibility is key to maintaining
competitive advantage. However, in the construction industry, we have seen a movement to many
of the sources and employment formats outlined in Atkinson’s model for the peripheral groups.
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These formats have become embedded and accepted as the norm in industry with these practices
even penetrating to groups which perhaps would once have resided in the area of the core groups.
Raiden et al (2008) estimate that 36% of the UK construction workforce is self-employed compared
to 12% in the UK workforce. Within the industry there is a strong dependence on the use of
subcontracting with contractors also utilising subcontractors and temporary workers to complete
projects they have won (Van den Brink, 2010); resulting in construction projects being
characterised by tiers of subcontractors. This system of work has been effective in utilising labour
from other parts of the EU as they migrate for cyclical work and return to their country of domicile
(Chapelle et al, 2008). The work by Chappelle et al also outlines the fact that the construction
industry more so than other industries suffers from labour shortages and as such this flexibility to
employ workers to meet demand, aids in the overall maintenance of competitiveness and meeting
customer standards for job completion.
Within the construction industry, temporary/agency workers are used primarily for one off jobs or
for peaks in demand (Forde et al, 2008) however increasingly there is a movement to use agency
workers for longer periods to reduce overall labour costs and to provide numerical flexibility. Forde
et al in their research found that 36% of employers utilised temporary agency labour, 80%
subcontractor and 47% self-employed workers. The main rationale for employment of contingent
contract forms over direct was found to be the ability to maintain and accommodate trends in
demand. Decisions regarding the format employed also required measuring alongside the work
output with agency/temporary workers found to be attributed to work of poorer quality.
Technology has also been a major impact in the construction industry and traditional core groups
such as Project managers and technology specialist have often made up these group. Due to the
core groups having a higher technological and niche skill set, they have often received increased
levels of job security. These formats however, are also currently experiencing levels of penetration
with technological changes resulting in outsourcing and subcontracting and an increasing reliance
on self-employed workers even for these core groups of specialists (Forde and Roberts, 2007).
The move to contingent means of employment for core groups also comes as a result of the
competitive advantage through tax benefits; which can be garnered for the firm during the
tendering process. As well as this the removal of need to remunerate self-employed staff for sick
days and holidays (Briscoe et al, 2000) has seen some firms seek flexibility and improved
positioning of the organisation through contingent formats. The issues regarding the principles of
HRM in the construction industry indicate that much of Atkinson's model has been embodied in the
industry research has however shown that the groups such as core groups operate in a different
manner when compared to core groups of directly employed groups in other industries. This
deviance from the norm indicates that the industry has also been impacted by a number of external
influences such as legislation and economic issues which has resulted in an industry structure
which requires high levels of flexibility.
Many of the HRM features discussed above can also be seen to be present in the Enginuity
simulation. It must be noted however that the environment within which we worked, was limited in
terms of the simulations capacity to cover all HR aspects of the construction and as such some
points will be inferred from the data gathered.
Within the constraints of the simulation our HR strategy altered as we went along taking into
account our overall strategy of profit maximisation. The Strategic Human Resource Management
model, best highlights how HR was managed to integrate horizontally and also vertically align with
Group 1 !15
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our overall business strategy. The environment within the simulation, allowed for appointments of
Project managers, labour force and Subcontractor labour to facilitate the completion of bids we
were successful in winning. During the early stages in period 5 the focus within HR was on
ensuring that it worked to further our overall strategy. We wanted to use the most cost efficient
method of labour whilst the company was growing and diversify our methods at later stages. At this
point it was about growth of the business and streamlining by continuous improvement. Hendry
and Pettigrew (1990) argue that strategy and its formulation is a complex issue, and therefore
needs to be clearly defined to remove the limits of an irrational and poorly laid out business
strategy. We realised the need for a clearly laid out plan of action within which we forecasted for
steady growth of our organisation. This reality meant that as the business went through a process
of growth in revenue, size and market share that our workload increased and equally our HR plans
for our workforce had to also accommodate this growth. In order to make these forecasts, we used
the management consultants report to analyse the effectiveness of our utilisation of labour. We
overmanned jobs in the early stages to finish the jobs earlier than had been outlined by the client
with the effective aim being to have additional labour to overman other ongoing jobs. For the
company this meant jobs finished earlier and we received bonuses from the client and created
satisfaction for later periods where customer relationship decided if we even received the
opportunity to bid for jobs from that client. A few examples of this can be seen in periods 5 for jobs
26 and 29 and also in 6 with job 67. By focusing on these organizational effects, we also enabled
productivity increases and benefits through low levels of lay-offs in the workforce.
Atkinson's model of the Flexible firm operates in a similar manner in Enginuity as in the real-life
environment. At different stages, we employed elements from various parts of Atkinson's model to
achieve flexibility in our growing business. This included outsourcing, subcontracting and agency
temporaries, functional flexibility, and numerical flexibility of 1st peripheral groups. Within Enginuity
the core group of workers comprised of the project managers. The project managers were multi-
skilled workers which enabled them to serve the businesses functional flexibility (Kalleberg, 2001)
requirements and enabled them to be redeployed quickly from one project to another. This was
used to move project managers with more experience/ specialist skills to jobs of higher values to
minimise the level of risk and to ensure a smoothly run project. Kalleberg (2001) found that high
performance organisations generally placed their core occupation workers effectively which
resulted in mutual gains for both the organisation and its staff. In order to maintain this high-
performance environment, the core group of workers at the centre of Atkinson’s model [project
Managers] enjoy benefits such as job security and full time work, within Enginuity the project
managers served with us from the start to finish with only one resignation occurring in the
simulation. The contentment of the project managers meant the business projects ran smoothly
with less issues and disruptions.
As well as our core group of workers, we also had our 1st peripheral group of workers our labours
who cluster around the core group to make up a numerically flexible group (Atkinson, 1984).
Typically, the labourers in the construction industry could be formed from any number of means
from the 1st peripheral group to subcontracting or agency based means, however within Enginuity
they come from the 1st peripheral group with the purpose of taking up the slack as the market
grows. This peripheral group of labours follow a trend of expansion as the firm grows in Enginuity
however their flexibility and to some extent their level of expendability can be seen in the transition
from period 6-7 where business growth takes a dip and a significant portion of the peripheral labour
force is laid off. Kalleberg (2001) describes the function of peripheral labour force to the employer,
as a means of obtaining numerical flexibility and otherwise reduce organisation costs. The need for
Group 1 !16
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the peripheral labour force to act as buffers serves to protect the competitive interests of the
business.
In later periods of the business in Enginuity the business saw continuous growth within the
organisation, with this growth came the need for an increased focus on numerical flexibility to
accommodate varied working practices. These variances in our working practices formed with
progressive change from build only projects to design and build where clients requested the use of
specialist skills such as BIM. These specialist skills required utilisation of both the functional
flexibility aspects of skilled workers [Design] and numerical flexibility aspects [Labour] created by
the increased workloads. We utilised the external aspect of Atkinson’s model and incorporated
both outsourcing and subcontracting/ agency labour. By outsourcing to companies such as Dave
Thomas associates we could keep costs low for specialist design and build projects where we
lacked employees possessing the necessary specialist skills. Outside the realms of the simulation
in the construction industry, general practice would be diversifying the business by expanding to
incorporate these skill sets, therefore reducing the need and costs of outsourcing; however, for a
growing business such as Future PLC this gives them the flexibility in their commercial agenda to
pursue more lucrative projects to fuel growth. As we grew we also utilised subcontractor labour to
meet the demands of the many jobs we had and to ensure they met the deadlines set by clients.
We can conclude from the results of the simulation, that in retrospect many of the theory attributes
were applied during the periods of management at Future PLC. The need for flexibility can be seen
to be an innate aspect of the construction industry and I think that as time progresses, and the
increase of technology becomes central to construction projects that we will see the need for
increased flexibility in construction firms as they utilise the specialist skills of self-employed
specialist workers and companies. Whilst many industries are seeing a movement to
mechanisation, the nature of construction means for many years to come, the industry will remain
labour intensive and the ability to readily access the multi-disciplined pool of workers required for
construction will see a continued change in construction HR practices. There is however a need for
development of industry standards and practices if we are to ensure that the industry does not
develop an over reliance on temporary workforce methods of externalisation; as this may see a
reduction in the quality of workmanship provided by an agency workforce and should instead seek
to maintain a balanced workforce.
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REFERENCES
Armstrong, M. And Taylor, S ( 2014) Armstrong’s Handbook of Human Resource Management

Practice. 13th Edn. London. Kogan Page. Pp.18-21
Atkinson, J. (1984) `Manpower strategies for flexible organizations', Personnel Management,1984,

August, Pp.28-31
BRISCOE, G., DAINTY, A. and MILLETT, S., 2000. The impact of the tax system on self-
employment in the British construction industry. International Journal of Manpower, 21(8), pp.
596-613.
Chapelle, L., Dhananjayan, S., and Swinburn, T (2008) Building a new home: Migration in the UK
construction Sector [PDF] Institute for Public Policy Research. Available from: https://
www.researchonline.org.uk/sds/search/
download.do%3Bjsessionid=BCD89223B19A801964DA05D0747043B9?ref=B11490 [Accessed on
08/01/17]
Druker, J., White, G., Hegewisch, A. and Mayne, L. (1996) Between hard and soft HRM: human
resource management in the construction industry. Construction Management and Economics,
14(5), 405–16
FORDE, C., MACKENZIE, R. and ROBINSON, A (2008) Help wanted? Employers' use of
temporary agencies in the UK construction industry. Employee Relations, Volume 30, Issue 6.
Available from: http://search.proquest.com.ezproxy.bcu.ac.uk/docview/
235183869/9C04CEF4DA4B4C4CPQ/6?accountid=10749 [Accessed 07/01/16] pp. 679-698.
FORDE, C. and MACKENZIE, R (2007) Getting the mix right? The use of labour contract
alternatives in UK construction. Personnel Review, Volume 36, Issue 4. Available from: http://
search.proquest.com.ezproxy.bcu.ac.uk/docview/214806537/9C04CEF4DA4B4C4CPQ/2?
accountid=10749 [Accessed on 07/08/17] , pp. 549-563
Guest. D (1995) Human resource Management, trade unions and industrial relations. Human
resource management. A critical text. London. Routledge.
Hendry, C and Pettigrew, A (1990) Human resource management: an agenda for the 1990s,
International Journal of Human Resource Management, Volume 1, Issue 1, pp 17–44
Kalleberg, A (2001) Organizing flexibility: The flexible firm in a new century. British Journal of
industrial relations, Volume 39, Issue 4. Pp479-504
Kanter, R M (1984) The Change Masters, London, Allen & Unwin, Pp. 288
Mouritsen. J (1999) The Flexible Firm: Strategies for subcontractor’s management control.
Accounting organizations and society. Volume 24, Issue 1, Jan 1999. Available from: http://
www.sciencedirect.com.ezproxy.bcu.ac.uk/science/article/pii/S0361368297000597 [Accessed on
06/01/16] Pp.31-55
Group 1 !18
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Office for National Statistics (2016) Time series Explorer: construction. Available from: https://
www.ons.gov.uk/timeseriestool?
query=construction+&topic=&updated=&fromDateDay=&fromDateMonth=&fromDateYear=&toDate
Day=&toDateMonth=&toDateYear=&size=10 [Accessed on 07/01/16]
Raiden, A., Pye, M. and Cullinane, J. (2007) The nature of the employment relationship in the UK
construction industry, People and Culture in Construction, Spon, pp. 39–55.
Research Gate (2016) Applicability of existing HRM Models in order to develop HRIS Model for
university. Available from: https://www.researchgate.net/figure/267362603_fig3_Figure-3-An-
integrative-model-for-strategic-human-resources-management-5 [Accessed on 30/12/16]
Torrington, D., Hall, L., Taylor, S., And Atkinson, C (2014) Human Resource Management. 9th Edn.
Harlow. Pearson Education Limited. Pp. 58-59,98-101
Truss et al (1997) Soft and hard models of Human resource management: a reappraisal, Journal of
management studies, vol 34, Issue 1. Available from: http://
onlinelibrary.wiley.com.ezproxy.bcu.ac.uk/doi/10.1111/1467-6486.00042/epdf [Accessed on
06/01/17] Pp.53
Van Der Brink, Y and ANAGBOSO, M (2010) Understanding the divergence between output and
employment in the UK construction industry. Economic & Labour Market Review, Volume 4, Issue
3. Available from: http://search.proquest.com.ezproxy.bcu.ac.uk/docview/
89151367/9C04CEF4DA4B4C4CPQ/8?accountid=10749 [Accessed 07/01/17] Pp. 42-51.
Watson, T J (2010) Critical social science, pragmatism and the realities of HRM, The International
Journal of Human Resource Management, 21 (6), pp 915–31
Wilkinson, A., Johnstone, S., and Townsend, K (2012) Changing Patterns of Human Resource
Management in construction. Construction Management and Economics, volume 30, Issue 7,
Available from: http://dx.doi.org/10.1080/01446193.2012.711562 {Accessed on 06/01/17] Pp.
507-512
WONG, J.M.W., CHAN, A.P.C. and CHIANG, Y.H., 2011. Construction manpower demand
forecasting. Engineering, Construction and Architectural Management, Volume 18, issue, Pp. 7-29. 
Group 1 !19
Financial Management
The Agency Theory

INTRODUCTION
Finance is one of the indispensable and basic part of business concerns, thus, it has a noteworthy
part in each impact of the business activities and exercises. It is applied as a part of all the area of
the exercises under the distinctive names .Financial management is a basic piece of general
administration. It focuses on the responsibilities of the Financial Manager in the business
company.The duty here was to deal with a UK-based multinational construction firm . Its base
camp is in London and it has been involved in trade for only one year. My group Future PLC is
expected to run the organization for years to come, settling on the key business choices connected
with finance, advertising, overheads, procurement and employment movement. Future PLC have
done a viable system to develop the business, and fulfil the increased demand of the
organisation's shareholders, who are waiting patiently to see an immediate return on their
investment.
Me as a financial manager and I intended to administrate the finance division in the virtual
construction organization with Enginuity software.During the process, viable strategies in the
finance division have been implemented.Some of these procedures are ; Identifying new work in
various areas and places (UK/Overseas) by expanding the foundation of the business to
accomplish development. In addition, winning new work in a focused offering environment and this
lead to increasing profitability via productive job and overhead administration. On the other hand
wealth maximisation have been achieved by raising the profit of the value, this has kept the
shareholders content . Trying to increase the capital base was a long term strategy , by Which will
decide the level of work that the organization can embrace and increase the organization esteem
by using the money to build the capital base and reinforce more growth specially when use the
cash to contribute more in different organizations who offer a superior return than can be acquired
from the bank, or who might have the capacity to offer advantages to diminish costs on
employments in progress.
By embracing the above techniques my team( Future Plc ) have enlisted the most astounding
score and Overall organization performance enhanced from 1,000 to 1,567 points.
THE SELECTED THEORY

Every so often, I think about how my obligations as financial director must be run! duties and
relations with others inside the association contrast with other construction financial directors.
Correspondingly, construction organization proprietors now and then doubt what abilities are
required and what desires ought to be held of their construction financial director. Here, I'm happy
to give the responses to such inquiries. We will audit how financial managers oversee the Finance
outlet, and which theory standards have/have not been implemented plus, the major obligations to
the organisation's owners and creditors from the chiefs of finance. since I have been agitating to
run the financial division the theory that I will discuss is the agent theory. This theory have been
implemented in the financial administration area.In this work I will make it clear how this theory
going to be connected to this division and to the construction and which principles have been
implemented or not concerning the financial division in Enginuity.
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FIELD OF THE THEORY IN GENERAL
The Agency theory characterises the agency relationship, one gathering, called the agency,
decides, and follows up in the interest of another, called the principal. The agency theory
endeavours to compress and solve issues emerging from the relationship between a principal and
an agent. Agency connections are regular in financial management, because of the way of the
business. When one individual deals with someone else's money related issues, an agency
relationship exists as a matter of course. Understanding the theory's application in financial
administration can give you more prominent knowledge as an investor, stockholder or aspiring
financial professionals (Ingram, 2016).
Agency theory proposes that the company can be seen as a link of contracts (loosely defined)
between resource possessors. An agency relationship grows whenever one or more persons,
called principals, hiring one or more other persons, named agents, to do some service then hand
over decision-making power to the agents. The main agency connections in business are those
between stockholders and directors and between credit-holders and stockholders. These
connections are not inevitably consistent ;agency theory is interested in the conflicts of interest
amidst agents & priconcernedncipals. (Cheriyan, 2013).
Various particular agency connections can exist in the realm of financial management. Corporate
administrators and organization shareholders serve as a prime illustration. CFOs and other
financial administrators make decisions for the benefit of the interests of shareholders, the
principals in the relationship. As another illustration, financial organisers and common reserve
managers go about as specialists for the benefit of individual customers and fund participants
(Ingram, 2016).
In Financial Management it's in general accepted that the objective of a private company is
shareholder riches expansion individually maximising shareholder esteem (BPP, 2012). This
suspicion match with a late explanation of Philip Clarke (2013) - Chief Executive Officer of Tesco
who pronounced that ‘everything they are doing reflects [their] determination to deliver shareholder
value’.The question emerges if shareholder riches augmentation is a proper objective since there
are different people other than the shareholders that are influenced by the activities of a company.
Another point is that administrators regularly don't act in shareholders best interest to amplify their
own particular utility. This irreconcilable circumstance is depicted by the organization theory.
Besides the organization relationship entangles the accomplishment of the objective of shareholder
wealth maximisation (Van & J. Wachowicz, 2009) .
Lately shareholders of the previous Yellow Pages distributer Hibu accuse the administration not to
act to their greatest advantage in view of both an absence of data given by executives and by
rebuilding the organization with a debt-for-equity swap that wipes shareholders out. As an outcome
of Hibu's abusive obligation mountain the said debt empowers significant moneylenders to take
control over the organization (Spanier, 2013) . In this setting the idea of cost of capital and its
estimation gives a way to deal with the cost of financing choice (McLaney, 2011). Since the debt-
for-equity swap rebuilds Hibu's accounting report it is of vital significance to look at the source of
capital that are talked about in this setting with a specific end goal to assess the sensibility of the
said debt from economical point of view.
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FINANCIAL MANAGEMENT ; THEORY : DEFINITIONS, CONCEPTS
Financial administration is interested in the securing, financing, and administration of assets
considering some general objective. Therefore the resolution function of financial administration
can be separated into three main aspects: the venture, financing, and asset administration
resolutions. (James, et al., 2008) .
Financial management is a necessary part of general administration. It is pertaining the

responsibilities of the financial managers in the business company. The term financial
management has been characterised by Solomon,“It is concerned with the efficient use of an
important economic resource namely, capital funds”.The most prevalent and adequate definition of
financial management as clarified by Solomon .
Kuchal is that “Financial Management deals with procurement of funds and their effective
utilisation in the business”.
Howard and Upton : Financial management “as an application of general managerial principles to
the area of financial decision-making”.
Weston and Brigham : Financial management “is an area of financial decision-making,

harmonising individual motives and enterprise goals”.
Joshep and Massie : Financial management “is the operational activity of a business that is
responsible for obtaining and effectively utilising the funds necessary for efficient operations”.
In this way, Financial Management is related to the efficient assets administration in the
business.Therefore, Financial Management as rehearsed by business companies can be named
as Corporation Finance (James, et al., 2008).
SHAREHOLDER’ WEALTH MAXIMISATION AND ITS LINK TO AGENCY THEORY

In spite of the fact that there is no exact meaning of shareholder wealth maximisation, the market
cost of shares gives a decent way to deal with shareholder's riches since it stands for the available
market estimation of an organization and can along these lines be put on a level with the wealth of
its proprietors – the shareholders (Van & J. Wachowicz, 2009) . Accepting that the present share
value stands for shareholder's wealth, administration's choices ought to prompt to rising share
costs and in addition dividend growth so as to make shareholder value (BPP, 2012).
Fundamentally the presumption that private companies attempt to boost the wealth of their
shareholders is exceptionally clear since they are really the present proprietors of the organization.
In this way, at first view shareholder wealth boost is by all accounts a fitting hierarchical objective
since it harmonises with the goal of the proprietors of the enterprise. Besides, since the share
value mirrors administration's performance of making shareholder value the accomplishment of the
goal can be measured effortlessly. However, making shareholder riches as an essential financial
target is an extremely complex issue since there are different partners that are influenced by the
company's activities (BPP, 2012) .
Tesco's CEO Philip Clarke (2013) characterises making shareholder value as “an appropriate
balance between investing for future growth, and delivering sustainable returns for shareholders”.
Particularly the future development of each organization does rely on its shareholders as well as
Group 1 !22
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vigorously relies on every single other partner. For example, without smart administration choices,
roused workers, fulfilled providers and clients scarcely any firm could be fruitful. So it's completely
vital for administration to consider the partners while deciding. The question emerges on the off
chance that it is most likely more sensible to concentrate on the interest of all partners rather than
just concentrating on the shareholders (McLaney, 2011).Theories such as corporate social duty
(CSR) underline these considerations focusing on the significance of considering the enthusiasm
of partners keeping in mind the end goal to accomplish the general objective of shareholder wealth
amplification (Van & J. Wachowicz, 2009).
Lately, the principal-agent theory has been getting a developing consideration in different
connected fields, including construction administration. As the theory concerns data asymmetry,
and this happened when one of the parties is preferred educated over the other, and in which
parties don't have similar interests, it is probably going to affect construction management, where
the parties of the project unite a wide assortment of both interests and experience to the job that
needs to be done.
AGENCY THEORY IN CONSTRUCTION INDUSTRY

The principal-agent theory offers a helpful representation of venture administration as connected to
construction and different fields in which project management assumes an essential part. George
Akerlof, Michael Spence, and Joseph Stiglitz shared a Nobel Prize in economics in 2001 for their
work on data asymmetry directed in the 1970s. It gives one of the best known uses of data
asymmetry in financial aspects, which is the circumstance in which one of the two parties is better
educated over the other, and in which they don't have similar interests (Jensen, 2000) . As per
principal-agent theory, the accompanying sorts of data asymmetry apply for venture parties:
shrouded qualities, concealed data, and shrouded intention. These three sorts of data asymmetry
separately create the accompanying dangers: antagonistic selection, moral peril, and hold-up
(Jäger, 2008) . D. Distinctive premiums of agents and principals proposed by the theory have
additionally been explored from the vantage purpose of ethics or morality (Quinn & Jones, 1995).
In venture administration, the concentration has at first been on the relationship between the
venture proprietor and the venture manager engaged in for a specific venture project (Turner &
Müller, 2004). However, it has additionally been stretched out to different agents occupied with
instruction, like contractual workers, sub-contractors, designers, experts, et cetera. In the least
complex circumstance, the principal is known as the venture proprietor and the agent is known as
the contractual worker. Both are guided without anyone else's input enthusiasm. As indicated by
the theory, crafty conduct can be normal from both, however a significant part of the literature is
regarding the temporary worker's artful conduct. However, the relationship turns out to be
progressively complex as the quantity of venture parties develops. It can be expected all through
that agents will endeavour to expand their advantages even when that may include a higher harm
to the principal (Schieg, 2008).
Past research has demonstrated that venture supervisors assume a vital part in construction
ventures, and particularly in the construction stage, when they are more critical to venture
accomplishment than the venture proprietor and the contractor (Ceric, 2014). (Ceric, 2012a,b,c,d).
Either conspiracy or conflict between venture managers against the interests of the venture
proprietor and contractor can have impeding impact on venture finish within time, budget, and
quality coveted. In a brief review (Ceric, 2012) characterised the literature connecting with the
principal agent theory as far as the three dangers produced by data asymmetry, specifically
adverse selection, moral risk, and hold-up .
Group 1 !23
Theory applied to Enginuity

The conflict of interest in the situation is clearly
defined as my strategy was to increase the
profit of the company by using some of the
cash flow for future investments and paying
the minimum dividend (2%) of the equity just to
keep them calm to achieve Profit
maximisation, since Profit maximisation
objectives help to reduce the risk of the
business as it’s the main source of finance in
addition to Profitability that meets the social
needs as well.
Fig. 1. Objectives of the financial manager
As I'm being an agent to deal with the financial division by the shareholders (principals) and since
that the objective of a private company is shareholder riches expansion respectively expanding
shareholder value (BPP, 2012)). My goals in dealing with this division in Enginuity software was to
accomplish wealth and benefit boost as well these destinations have been unmistakably
characterises by C. Paramasivan & T. Subramanian (2009) in there book Financial Management
as appeared in figure 1.
Fig [2] : Financial decision in Enginuity
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As shown in Fig [2], at the beginning of the period 5, I paid the minimum dividend which was 2%
for the shareholders, this will keep them calm but this is not satisfied enough for them, meanwhile
this amount will keep them calm! If I want to run on their desire, I would more and this will make
them happy not only calm and content. At the same time this will reduce the outside investments
and the chance to increase the capital base as well.
Here the conflict of interests which was addressed in the Agency theory is well tackled, as I want to
pay minimum amount for the shareholders, and to keep the cash money to increase the capital
base as shown in period 5-8 .This increment lasts until period 12, plus starting to make
investments in proper companies as shown in period 8 which leads to maximise the company’s
profit in the long term.On the other hand , shareholders need to get the most extreme benefits as
soon as possible without thinking about the real benefits from profit maximisation as it leads the
company to extend increasingly showing the outcome and the end of wealth examination.
Agency theory addresses issues that emerge because of contrasts between the objectives or
longings between the principal and agent. This circumstance may happen in light of the fact that
the principal doesn't know about the activities of the agent or is disallowed by resources from
obtaining the data. I have a desire to extend the business into different markets. This will sacrifice
the transient profitability of the organisation for forthcoming development and higher profit later on.
In any case, shareholders that desire high profit sum growth might be uninformed of these
arrangements.
CONCLUSION
In summary the objective of shareholder wealth augmentation gives an abrogating and sensible
reason for financial decision yet it requests to accomplish this target management has precisely to
consider the interest of other partners. However, shareholders need to guarantee that the
management demonstrates to their greatest advantage by giving them suitable motivations. In
spite of the fact that a higher adapting level leads to higher returns to shareholders as a result of
lower cost of capital, shareholders need to consider that with higher debt capital the impact of loan
specialists increases too. Along these lines, shareholders need to guarantee that the administration
still follows the objective of shareholder wealth boost and that they're not controlled by the lenders.
Group 1 !25
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REFERENCES
BPP, A., 2012. Financial Management Study. In: Financial Management Study. 6 ed. London:
Learning Media Ltd, p. 5.
Ceric, A., 2012a,b,c,d. Minimizing communication risk in construction: a Delphi study of the key
role of project managers. Journal of Civil Engineering and Management, 20(06), p. 22.
Ceric, A., 2012. Minimizing communication risk in construction: a Delphi study of the key role of
project managers. Journal of Civil Engineering and Management, 20(06), p. 22.
Ceric, A., 2014. Minimizing communication risk in construction: a Delphi study of the key role of
project managers. Journal of Civil Engineering and Management, 20(6), p. 22.
Cheriyan, N. K., 2013. the commerce pedia. [Online] 

Available at: http://thecommercepedia.blogspot.co.uk/2013/03/theories-in-financial-
management.html [Accessed 26 12 2016].
Ingram, D., 2016. Managers. [Online] 

Available at: http://smallbusiness.chron.com/agency-theory-financial-management-81899.html
[Accessed 25 12 2016].
Jäger, C., 2008. The Principal-Agent Theory within the Context of Economic Sciences.
Norderstadt: Herstellung und Verlag, Books on Demand GmbH.
James, C., Van, H. J. M. & Wachowicz, J., 2008. In: Fundamentals of financial management. 13
ed. Edinburgh: Prentice Hall imprint, p. 27.
Jensen, M. C., 2000. Theory of the Firm: Governance, Residual Claims, and
OrganizOrganisationalational Forms. Cambridge: Harvard University Press.
McLaney, E., 2011. Business Finance - Theory and Practice.. In: Business Finance - Theory and
Practice.. Edinburgh: Pearson Education Limited, pp. 21,22,23.
Quinn, D. P. & Jones, T. M., 1995. An agent morality view of business policy. Academy of
Management Review, 20(1), pp. 22-42.
Schieg, M., 2008. Strategies for Avoiding Asymmetric Information in Construction Project
Management. Journal of Business Economics and Management, 29(11), pp. 47-51.
Spanier, G., 2013. Yellow Pages publisher Hibu is set for a grilling from shareholders. [Online] 
Available at: http://www.independent.co.uk/news/business/news/yellow-pages-publisher-hibu-is-
set- for-a-grilling-from-shareholders-8899213.html 
[Accessed 28 12 2016].
Turner, J. R. & Müller, R., 2004. On the nature of the project as a temporary organisation.
International Journal of Project Management, 21(1), pp. 1-8.
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Van, H. & J. Wachowicz, J., 2009. Fundamentals of Financial Management.. In: Fundamentals of
Financial Management.. 13 ed. s.l.:Pearson Education Limited, pp. 5,6.
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Business Expansion
INTRODUCTION
The ability for businesses to expand and reduce with market demands is vital for its efficiency,
profitability and therefore its longevity. Following an analysis of the UK market, it was deemed that
investing further within this market would not provide the ready access to work that Future PLC
needed to support its growth. Therefore it was determined that the company needed to venture into
foreign new and foreign markets. Globalisation has provided a platform for businesses to work all
over the globe, thus enabling businesses to easily expand their bases of operations and to
increase turnover. Whilst globalisation allows for companies to benefit financially, globalisation
allows less developed areas to improve their infrastructure and economy by capitalising on global
businesses experience and expertise. Whilst the theories presented are based on geographical
expansion, the principles can be applied to expansion within the UK market and other domestic
markets.
Whilst business expansion is traditionally thought of as increasing ones customer base, it can also
include the offering of new services to existing customers. In this instance, Future PLC has
increased the number of sectors within the construction industry that we work in, as well as offering
design and build packages to customers, both new and existing. Business expansion can take
many forms, however Future PLC has opted to use the work undertaken by Sanderson (2006) to
form the basis of the Future PLC’s business expansion framework.
My role as the bidding and expansion manager was to gain access to these markets through
competitive tenders submissions. By following Future’s risk adverse business strategy Future were
able to ensure that our good name followed the business’s relocation abroad by building high
quality structures at the best prices to the Client.
BUSINESS EXPANSION THEORIES

Business expansion can take the focus of many forms, but typically it results in a business seeking
to gain access to new customers or markets. To ascertain increased growth it is important for
businesses to undertake detailed analysis of their business in its current state. This analysis will
determine, whether the business is robust enough to handle expansion. Research has suggested
that when businesses expand (particularly) whilst expanding abroad their performance will initially
decrease (Contractor, Kundu & Hsu, 2003). Once this initial decrease in performance has been
experienced, the performance steadily increases until saturation point, at which the performance
begins to decline once again. It is therefore important to ensure that long term growth is possible
within a market.
Globalisation has allowed for businesses to expand across the globe with relative ease. By gaining
access to additional markets companies have been able to grow exponentially. Countries that are
classed as “developing” are able to benefit by utilising the expertise of the incoming businesses.
Particularly in construction, developing nations are able to utilise contractors knowledge and high
turnovers to undertake ambitious infrastructure projects.
As has already been established international expansion can promote negative growth from the
initial outset (Contractor, Kundu & Hsu, 2003). This initial decrease can be attributed to the
increased costs of the expansion, whilst the initial inability to access new markets means that initial
capital gain means that the business runs at an initial loss (Zaheer & Mosakowski, 1997). It is
important to balance the aspirations of business expansion (and the potential gains) with the
apparent risks of such a large capital expenditure. Sanderson (2006) hypothesised that business
expansion was based on four underlying principles and ranked them in order of risk. (The first
being risk the most risk averse and the fourth as having the highest level of risk). Firstly, the author
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hypothesised that the most risk averse strategy to global expansion was to offer existing customers
existing services. In practice this relates to a firm focusing on winning more work from their existing
customer base, whilst only offering their existing services. An example is a contractor winning more
work in their specialist field.
Secondly, a firm can expand by offering new services to their existing customers. By offering a new
service to an existing client, the business reduces the risk of not being able to find clients. Similar
to the first example an electrical contractor could offer mechanical services to their existing Clients.
This enables a business to utilise their links with their customer base (with relative safety) whilst
enabling the business to develop a secondary marketable skill. The third option is for a business to
follow the stereotypical view of business expansion and to try to seek new customers for their
existing services. This method requires for businesses to utilise their marketing and networking
skills to develop new lines of business. An example of such, would be a main contractor seeking
new work by contacting architects and clients asking if their are opportunities to work/for them. A
benefit for this form of business expansion is that diversifying the Client base provides security
(statistically) whilst being able to utilise the contractors existing strengths and expertise.
Finally, businesses can undertake what Sanderson (2006) states is the riskiest form of business
expansion. To seek work through new customers providing new services. This form of expansion is
the riskiest on two fronts. There is no security from accessing the existing Client base, and there is
the risk of using a company’s new services, which may not have the same reputation as their
specialist services. Although Sanderson stated that this method herald the most risk, it has the
potential to be the most beneficial. As already stated, by diversifying the Client base, there is
greater statistical security (should one client no longer wish to use the businesses services, there
are other clients who may wish to). But by diversifying the skill set of the business, there is the
availability for businesses to alter their investments between departments to suit the market place.
An example would be a main contractor who specialises in the British Infrastructure sector who, at
the prospect of financial instability, wishes to develop their mechanical and electrical department
within the Middle Eastern market to further develop the business.
There are numerous ways in which a company can achieve global expansion. Sanderson (2006)
stated that global expansion could be achieved trough acquisitions, following customers, targeting
specific projects, or identifying a market opportunity or a lack of competition.
Not only is it important to identify how a business will expand, it is also important to determine
where a business will expand. Porter (1990) identifies four conditions that determine competitive
advantage within a nation, understanding these principles allowed Future PLC to successfully
select countries to expand to. These being Factor Conditions, Demand Conditions, Related and
Supported Industries and Firm Strategies.
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Firm Strategy,
Structure & Rivalry
Factor Conditions Demand Conditions
Related and
Supporting Industries
Fig. 1.1 shows Porters five factors of National Advantage (adapted from Porter, 1990).
Factor conditions refers to the nations position in face of production; such as skilled labour and
infrastructure, this enables (or is a barrier to) companies to compete within the industry. For
construction this relates to whether a nation is able to provide the resources for a company
entering its economy. For example, a company looking to undertake building projects is likely to
expand in countries where there is already a skilled workforce, or a cheap workforce that can be
trained. Demand Conditions refer to whether the nation has a demand for the particular service a
company can offer. A country with a high prevalence of electrical contractors may/may not be
suitable for the an other electrical contractor entering the market. Related and Supporting
industries refers to available supply chain within a nation, can the business be supplied within the
target country? If a country does not have the resources to support that business effectively the
business will not be able to perform as efficiently as it should. This can stunt growth and even lead
to loss. Finally, firm strategy, structure and rivalry refers to how the host nation allows companies to
form and organise themselves, as well as the level of competition within an industry. A construction
company may not expand into a country that has stringent laws regarding labour or tax. It is also
reasonable to assume that a company would reconsider expanding into a country that has a high
level of competition.
PRACTICAL APPLICATION
Future PLC have a risk averse bidding and management policy. This was also the same with the
business expansion framework. Utilising the schedule set out by Sanderson (2006) Future
developed new areas of work firstly within our existing customers utilising our existing skills and
expertise in the building and commercial sub-industry. By undertaking more work with our current
customers and allowing a good relationship to be developed the business was able to successfully
tender for a greater amount of work with these clients.
Once this avenue had been explored, Future then offered new services to these existing
customers. Initially the business undertook build only work, but for customers who had the need
Future undertook work in the transport and building and commercial industries. In addition, Future
started to provide design and build projects. These projects were successful on the whole and
further developed good relationships with our existing Client base. Using these improved
relationships we were then able to offer work in new industries such as waste and sewage and
energy.
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During this period it became apparent that our Clients needs for construction were reducing and
that developing lines of work in new parts of the world were important. With this in mind Future
began developing lines of equity and bidding for work throughout the globe, starting off in Europe
(to utilise the close proximity of the UK head quarters) and then moving further afield. With a
particular focus on the USA and Australia (where the majority of contracts were for our core
strengths building & commercial and transport).
Whilst focusing on developing abroad it was also important to ensure that Future’s reputation for
high quality construction was maintained. For this reason, Future maintained its international
operations on a build only basis. Sanderson argues that to successfully geographically expand, it is
important to maintain a strong operational basis. During the short time period, Future were not able
to invest in companies in the chosen areas of development, had this been the case, Future would
have undertaken more contracts abroad.
Expansion (according to Sanderson) can be achieved through acquisitions. By acquiring a

competitor, or sub contractor, it is possible to gain access to a new market, or as in the case of
Future, to drastically reduce overheads. By acquiring a large number of shares in vital sub-
contractors Future were able to reduce build costs by 1.8%. This enabled Future to bid lower than
our competition and win more work, this increased our turnover and therefore the total profits
increased as a result. Due to the strong investment in our sub-contractors and the increased
turnover from being linked with Future’s construction projects, Future received returns on our
investments of approx. 7%. Investment in Chain and Sprocket Engineering PLC enabled Future to
reduce costs of mechanical and electrical materials, which provided a substantial reduction in costs
for our main industry of focus building and commercial. By investing a similar amount in National
Aggregates PLC, Future were able to provide build costs for construction within transport industry
projects as well as building & commercial.
Whilst design and build projects tended to produce greater returns than build only projects; there
was also the greater risks for each project. Although Future PLC was expanding (which has its own
inherent risk) to ensure that projects were successful and maintained Future’s good reputation,
Future developed a partnership Dave Thomas Associates and Neo Creative Designs. By
developing partnerships with these two design teams, it was possible to negate risks and to reduce
build costs. For example, for job number 26 & 29, utilising specialist designers reduced bid costs
by 1% and reduced on site build costs by 1.4% and 0.9% respectively. Partnering with these
designers did not totally negate risk altogether. To ensure that risks were understood and negated
as far as possible, Future PLC acquired Fenchurch & Sons Ltd. a UK based risk consultancy with
international experience. By employing Fenchurch & Sons it was possible to confidently reduce risk
allowances within bids, enabling Future to win more work. Whilst on site Fenchurch & Sons were
also able to reduce risks and health and safety issues. Although not easily quantifiable, Future PLC
can say with certainty, acquiring Fenchurch & Sons provided to be an important decision.
Another method of global expansion was to target an market opportunity abroad. Following
analysis of competitor activity and the construction needs of the expansion target countries, it
became apparent that there were open market opportunities in Australia and the USA. Particularly
within Future’s main areas of focus building & commercial and transport infrastructure. This
coupled with the lack of competition within these areas meant that Future PLC were able to gain a
competitive edge whilst bidding on projects within these countries.
Due to Future’s strong market research it was possible to seek out future projects abroad that
would provide opportunities for expansion. For this reason Future targeted specific small and
medium projects in target countries to ‘dry run’ operations in that country. This enabled Future to
develop and assess resources within an area prior to targeting larger, riskier projects. This sound
operational base enabled Future to maintain market superiority in the Middle East and India.
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Whilst Future traditionally focussed on medium and small projects. The lack of competition swell as
the openness of the Middle East markets coupled with the company’s strong economic
performance; Future PLC were able to bid for large scale projects. It became apparent that
investments in professional services enabled Future to tender competitively and this coupled with
the lack of market competition made Future successful in winning large scale projects.
CHALLENGES AND SUCCESSES

From the offset Future PLC targeted to ensure that the business expansion process did not
produce undue risk to the company. This was ultimately successful as there was continued growth
throughout the period. Following the initial first two periods we experienced a growth as the
business was not able to secure work within the UK. As a business we therefore decided to expand
into other sectors and countries. Following a successful analysis of the market place, it was
determined that the USA and Australia were the optimum markets to enter.
The work by Contractor, Kundu & Hsu (2003) theorised that Future PLC would experience an initial
devaluation once a business begins to expand into a foreign market. Future PLC were able to
maintain its growth linearly ensuring that growth did not outstrip our ability to be self sufficient.
Zaheer & Mosakowski (1997) stated that a reason companies experience poor growth when
expanding to a foreign company is their inability to gain access to new work. This is mostly due to
a reluctance to bid for work that is outside the company’s main area of expertise. Future PLC were
able to mitigate this by having a solid platform within the UK of being able to provide specialist
services within two industries. This enabled Future when working abroad to have a broad scope of
areas in which the company could win work.
One issue faced was maintaining the supply chain whilst expanding. This risk had the potential to
undermine the work being done within the other departments. The failure to supply the projects
that the company were undertaking, could lead to a loss in reputation due to poor project quality
and cost/time overruns. It was therefore imperative that the supply chain was manned effectively.
To do this, the business acquired key sub contractors to ensure that Future PLC was able to
operate effectively at reduced costs and minimal lead times.
CONCLUSION
Future PLC were successful in maintaining strong business expansion. By following the principles
set out by Sanderson (2006) the business was able to develop a strong platform across many
markets. By expanding abroad, Future were able to access markets within successful economies
and capitalise on being a new specialist within that country’s construction industry. By focussing on
ensuring that our existing customers were happy with our performance and were given the best
price, Future were able to secure more work with these Clients, thus giving the business a strong
platform to seek new opportunities.
It became clear, that it was important that the business expansion strategy was linked to the aims
of the other departments within the business. This enabled Future to sustain our growth within
these markets without over reaching. It is important to ensure that the aims of the business stay
around the current infrastructure of the business. This ensured that Future were able to maintain
the good project performance and protect the good reputation of the business.
Future PLC ultimately won the Enginuity competition, therefore it can be reasonable to assume
that the theories used as the basis of Future PLC’s expansion efforts was correct for this occasion.
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REFERENCES
Contractor, F., Kundu, S. & Hsu, CC. (2003).A three stage theory on business expansion. Journal
of International Business Studies. 34(5).pp.5.
Porter, M.E. (1990). The Competitive Advantage of Nations. Harvard Business Review. March-
April. pp. 72-91.
Sanderson, E. (2006). Growing your construction business through geographic expansion.

Construction Accounting & Taxation. 16 (3) pp. 35 - 38.
Zaheer, S. & Mosakowski, E. (1997). The dynamics of the liability of foreigness: a global study of
survival in financial services. Strategic Management Journal. 18 pp. 439-464.
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Business Improvement
INTRODUCTION
Business improvement is an approach designed to establish a comprehensive view of performance
and measure the performance of the business relative to their objective. The aims of this work are
to study business improvement theory with align with Enginuity. Applying business improvement
model into the construction industry. Analysis the success of the group 1” Future PLC”
performance business improvement
1.THEORETICAL ASPECT OF BUSINESS IMPROVEMENT

Maintained business improvement depend on profound knowledge and understanding of the
theory of knowledge, variation and how the system’s components interact with each other. A wide
range of business improvement models can act as catalysts for developing business as well as
contributing to the issue of aligning performance measure and strategy (Dale,1999). Nearly all the
business improvement theories (Six sigma, Lean thinking) concentrated on improvement of
processes (Nave, 2002). The fundamental assumption thought to be that if all the element
processes are improved and strengthened to their maximum capability, the entire system will
record maximum improvement (Dettmer, 1997). However, this assumption ignores the effects of
interdependence or the linkage between processes.
Business improvement models can contribute to the issue of both financial and operation
performance measure. The strategic management approach tends to answer simple questions
which are where we are, and where we want to be, the purpose of performance measurement in a
strategic context, is to deliver the sense of control to attain the advertised objective to achieve the
organisation’s mission (Neely et al.,1994; Letza,1996). Through implementing sets of procedure:
clarification of objective, competitive strategy, strategic decisions, monitor progress and situation
assessment.
I have chosen to review Goldratt’s Theory of Constraints TOC in conjunction with the Enginuity
simulation. Goldratt’s Theory of constraints TOC maintain that organisation function as a system,
not as processes their success or failure rely on how well the deferent element processes interact
with one another. TOC likens system as a chain or a group of interdependent links working
together to achieved the objectives and how the entire system interacts with its environment.
2.THEORY OF CONSTRAINTS PRINCIPLES

The constrain is a weak link, and the performance of the entire chain is limited by the strength of
the weakest point. In other words, the output of the constraint restricts or rule the performance of
the entire company (Theory of Constraint institution). let’s assume that the deferent processes to
achieve goal are like chains as displayed in figure 1. The chains role is to passed force from one
end to the other and where is the weakest link will constrain the entire system.
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Figure 1 (sources: Dettmer, 1997)
Eventually the chain will fail at its weakest link at point, if you kept applying pressure to this link.
Goldratt believed that at any time there is just one constrain like the narrow neck of an hourglass
and the rest of the system at that exact time is a non-constraint (Dettmer, 1997). After strengthen
the weakest link the system will still fail at the weakest link again. In other words, no effort on
strengthen or unconstraint will provide instant, noticeable improvement in system capability.
The constraints could be physical constraints such as machinery issue, raw materials, and this
easy to identify, However policy or behaviour constraints are the most common problem and that
due to rapid change within the business environment while the ideas and the policies of the
organisation remain the same (Mabin and Balderstone, 2003).In order to integrate performance
measurement, It’s essential to developed a comprehensive view of performance indicators that
measure the overall health of a company which can then be more fully aligned with business
strategy (Nanni et al.,1992).
3.THE BODY OF KNOWLEDGE IN THE THEORY OF CONSTRAINT CAN BE OUTLINE INTO THE
FOLLOWING PERSPECTIVE;
3.1 PERFORMANCE MEASUREMENT:

Sound financial and operational performance measurement to judge the performance of the
system relative to its goal (Mabin and Balderstone, 2003). The purpose of performance
measurement in a strategic context, is to deliver the sense of control to attain the advertised
objective to achieve the organisation’s mission (Neely et al.,1994; Letza1996). Theory of
constraint’s performance measure centre, the three financial performance indicators are, profit
cash flow, return on investment, along with three operational indicators which are: throughput(T)
calculated as sales revenue less the total of variable cost (Theory of Constraints Institute).
Inventory (I) the total money invested within the business
Operation expense (OE) defined as the total non-variable cost related to turning inventory into
throughput
Net profit (NP) = Throughput (T) – Operational expenses (I)

RIO =NP/I
Cash flow incorporates the timing of income and expenditure.
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These measures provide effective way of evaluating the overall business’s situation as well as
addressing the requirement actions whether operational decision or design measure to drive
correction for the fallings of the cost, actions that are aligned with the objective of the company and
maximise return on investment (Smith,2000, p.29).
3.2 PERFORMANCE IMPROVEMENT

The function of performance improvement in TOC context, is to strengthen the weakest link and
adjust the rest of the system by using one of the following methods
Problem solving /TPS: tools for problem solving: The TPs define as a codified set of five logic-
based tools to enable managers to analyse problematic issue and identify, enhance and work
toward win-win solutions appropriately (Mabin and Balderstone, 2003)
Constraint management using the Five Focusing steps to achieve continuous business
improvement. The three basic management questions applicable to transformation (change) which
are what to change (identify the constraint), what to change to (what to do with constraints) and
how to cause the change (how to implement needed actions to change) (Dalmaris et al., 2007)
o Identify the constraint
Identifying the problem and what is the weakest link which is constrain the entire system. The three
basic management questions
o Exploit the constrain
This stage is mostly concentrated in how to exploit the constrain and get the most out of the
constraints component without committing to possibly costly change or upgrades. Avoid creating
more than the constraint can managed In other words, we should deal with the situation as it’s,
rather than increasing the budget by hiring more workers or purchasing machines etc.
o Subordinate other processes to the constraint:
After we identified the constrain step 1, and implementing the step 2 we should subordinate other
processes to adapt the rest of the system to the new adjustment to enable the constrain to perform
at maximum capability. changing sometimes include “de tune” some part of the system while
revving up others. Eventually we should be able to stabilised the weakest link by frequent shifting
constraints and wreak havoc on procedure, people and policies. Bear in mind this step has a direct
relationship with one of the TOC principle which is “Cause and Effect “, The assumption suggest
that all business function in an environment of cause and effect. Something causes something else
to happen
Once we have implemented step 1,2 and 3, we should evaluate the outcome of our action; is the
constrain component still constrain our system’s performance? If not, that means we have
successfully eliminated the constrain, and there is no need to step 4 which is elevate the constrain
and we skip forward to step 5. in case our system still constraint we should continue with step 4.
o Elevate the constrain:
if we get to this stage that means step 2,3 wasn’t sufficient to eliminate the constraints and the
capacity of our system is exhausted therefore, we must do something to strengthen the weakest
links by major change such as expanding.
o Repeat the cycle
After implementing the previous steps, we must go back to find a new constraint and keep
breaking them to maintain ongoing business improvement.
when implementing Five Focus there are key factors we should take into considerations;
• Is highly unlikely to break the constraints in step 1,2,3. When it comes to step four which is
“Elevating the constraint” that means we should take whatsoever action is necessary to
abolish the constraint. After completing this step the constrain must be eliminated.
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• Since of interdependency and variation, any subsequent modification we make to
overcome constraints will have effect on either unconstraint components or those
constraints we have previously eliminated. Revisit and update eliminated constraints is
highly recommended.
TOC approach embrace many principles method, tools and the methodology has developed keen
following among those familiar with the approach.400 article and 45 books on this topic in the last
10 years and the rate of publication on TOC is steadily increasing (Mabin and Balderstone, 2003)
4.THEORY APPLIED TO ENGINUITY:

Enginuity is a software give as the opportunity to participate in managing companies have already
operating for four period, known as the history year, each period equal to three month or quarter.
Each Group or management team teak control of the company to start from period five and then
have the responsibly to manage the company over a number of period known as early years. The
competition within several simulated companies. Each one has their unique profile and bidding
history, a carful assessment of the opposition required to frame a suitable procurement strategy.
Enginuity enable as to evaluate our performance as time progress, key performance indicator KPI
are used to measure and analyse the company’s performance. Each indictor weighted according to
their variability, out of 1000 at the end of each period, highlighting either deteriorations or
improvement in that area, However the ultimate improvement determined by the overall total. The
weighting for each indicator and the position is based on a comparison at the end of the
history ,two types of comparison are available .
Trend Comparison: Applies to turn over, Gross profit, client satisfaction, contract completion,
Turnover ratio, Capital Employment and Operational profit.
Snapshot Comparison: Links the existing indicator to the situation at the end of the history, applies
to company value, forward workload, forward margin, and share price.
All the Key performance indicators share the same importance, however with the Snapshot
Comparison, I am going to emphasising on a few of KPI due to their striking impact on measuring
companies’ performance.
Share price
Future PLC In measuring the company’s success or failure, share price is a key indicator among
the KPI, arising share price will significantly increase industry confidant on the company. The share
price is influence by: the level of dividend paid to shareholder (keeping the shareholder happy, will
have a positive effect on the share price), value of the company, future profitability, debt burden
known as gearing ratio. We have increased the share price by 42%.
!
Company Value = Cash account + Capital Investments
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Company Value is a key factor to win the industry confident, increasing the company value will
improve the industry confident and then the share price will increase accordingly. We have
increased the company value by 30%.
Future profitability
the future profitability “forward margin” is the expected profit in the next year from the company’s
current operational outlets. Any fluctuating in the forward margin from period to period will affect
the share price and consequently the company value. We have increased the forward margin from
888,630 to 1.165,328
Gearing Ratio
Gearing ratio” is a measure of the debt burden of the company and is the ratio of company’s
liabilities (cash account over draft)” to its assets “capital base and investment”, Gearing ratio
responsible for handling financial risk within the company. Worth emphasising that there are two
different gearing ratios: a financial gearing ratio consider for long term debt as a percentage of
equity and interest cover ratio that defined as (operating profit divided by the financial cost.
increasing in the gearing ratio, the company will be seeing as susceptible to both interest rate rises
and its ability to deal with the debt from future cash flow. Therefore, that will reduce industry
confident in the company which may have a negative consequence on share price.
5.EFFECTIVENESS OF THE GROUP1 CONSTRUCTION STRATEGY
GROUP 1 Future LPC aimed to attain a good strategical position in the market through
implementing the following objective, Developing the company infrastructure and fixed assets to
improve the overall operation performance, gain excellent reputation, cut down the overhead cost
and maximise profit, Maintaining cash flow, Expansion into international market. The financial
strategy for Future plc concentrate on developing the company’s value through winning a new work
in a competitive bidding environment, increase profitability and managing overhead effectively,
developing the infrastructure of the business to achieve growth, Enhance the company’s reputation
with clients, keep shareholder happy, invest in other companies that offer a decent return.in order
to assist the company financial performance there are a set of indicators include the following
cashflow, profitability and working capital(Kaplan,2016). In other words, business performance is
measured by growth and increasing the turnover and all of that are incorporated with capital base
strategy, dividing payment and investment strategy.
Company’s specialisms determined by capital investment. Benefit from investment is a major factor
to improve the company’s value. Investment mainly done through operating profit from projects,
building cost reduction, using cash to invest in other companies and investing in partners assists
(supply chain) with reduction in job costs. We invested in Chain& Sprocket Engineering to support
our Building& Commercial projects. Also, we have investment in National Aggregate PLC for
suppling materials and labour to projects. The company recorded 577,500 as average investment,
5.2% investment return per period, 0.46% reduction in building cost, 0% reduction in risk cost.
6.FUTURE PLC COMPANY FINANCIAL PERFORMANCE AND FUTURE DIRECTIONS

Performance indicators were used to measure company progress in several key areas they were
weighted at the start of the reflect their variability, initially to 1,000 points. Our company Future PLC
performance improved from 1,000 to 1,567 points. Evaluating of (KPI) as an indication the
company’s financial performance. Capital employed increased from 71% to 82%, Turnover
increased by 14% ,overhead costs decreased from 1.8% to 1.3%, operating profit increased from
1.6% to 3.1%, dividend paid decreased from 1.9% to 1.4%, future outlook increased from
23,370,230 to 39,544,770
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7.PERFORMANCE MEASURE AND THE THEORY OF CONSTRAINT.

KPI provide effective way of evaluating the overall business’s situation as well as addressing the
requirement actions whether operational decision or design measure to drive real improvement for
the fallings of the cost, actions that are aligned with the objective of the company and maximise
return on investment {Smith,2000, p.29}. undoubtedly some decisions in that may appear to
improve some KPIs however these decisions may have a damaging effect on others in this case
according to TOC the constraint we face originate from our procedure, policies and the lack of
understanding the cause and effect principles. You might think to save on cost on your overhead
management by reducing the staff level, would be profitable, however bear in mind that such
decisions could have a negative impact on overall client satisfaction and damaging the company’s
reputation. As step three from five focus suggested that all business function in an environment of
cause and effect. Something causes something else to happen, we should subordinate the other
processes to adapt the rest of the system to enable the constraints to performed to its maximum
capability.
Irregular flow of work, the nature of contracting arrangement in the construction industry and the
issue of uncertainty in a constantly shifting business environment, firms in the industry have faced
significant pressure to deal with the core work (Bresnan et al., 1985; Ball, 1988; Bon, 1989).
Inappropriate allocated labourers or poorly managing labour pool could affect either: the customer
satisfaction as I explained earlier, or the turnover in cause of overstaffing. Applying five focus here
seem helpless and that is because the TOC is not designed to the construction industry and this
has more to do with how the system interact with its environment. {is designed for the
manufactures}
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PROCUREMENT& THE THEORY OF CONSTRAINTS
Procurement in construction is the organisational framework implemented by the client for the
management of design and construction of a project to obtain his tender (CIOB,2010). My role as a
procurement manager was primarily concerned with securing jobs for the company. This involved
producing an accurate assessment for the cost and risk. I understood that Procurement is
fundamentally a sequence of considered risks. The key factors that affect the procurement process
are:
1. Capital base workload limitation,

2. stay within the industry limitation in terms of jobs in progress,
3. Identify the potential rivals,
4. client’s relationships.
We have bid for 24 jobs out of 71 identified, we won 13 jobs. However, we have lost 11 jobs, 18%
due to our poor relationship with the client and 82% due to us bidding too high compared of our
rivals. Procurement practices have improved over the course of the process, after evaluating our
performance. Period after period and analysis the reason behind losing some jobs was identifying
the constraints, the overall figures show our risk assessment was inadequate. Client relationship
was affected by our workload demand.
CONCLUSION
Theory of Constraints (TOC), is a system improvement rather than a process model philosophy.
Organisations live or die as a system not as a process. when applying TOC into the construction
industry, construction companies function as a component process which interact with one another
and that is what exactly the TOC emphasises on. E.g., limited workload can stop the procurement
department to win a new tender or high gearing ratio can affect the entire company and will reduce
industry confident in the company which may have a negative consequence on share price. As the
theory is not designed specifically for the construction industry there is some weakness when
applying the model directly, such as considering the rapid change and the nature of contracting
arrangement in the construction industry, and how to manage the Ideal labour pool. Overall I
believe TOC is a stop gap to think, rather than waiting for procedure to solve the problems. John
W. Gardner wrote “The rule book becomes fatter as the ideas become fewer.” An organisation
need some means of combating the process by which people become prisoners of their procedure.
Group 1 !40
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REFERENCES
Dalmaris, P., Tsui, E., Hall, B., Smith, B., 2007. A framework for the improvement of knowledge-
intensive business processes. Business Process Management Journal 13, 279–305. doi: http://
dx.doi.org.ezproxy.bcu.ac.uk/10.1108/14637150710740509
Dettmer, H.W., 1997. Goldratt’s Theory of Constraints: A Systems Approach to Continuous

Improvement. ASQ Quality Press.
Five Focusing Steps POOGI Process of On-Going Improvement [WWW Document], n.d. . Theory
of Constraints Institute. URL http://www.tocinstitute.org/five-focusing-steps.html (accessed 1.4.17).
Goldratt, E. (1996), “My saga to improve production”,APICS – The Performance Advantage,Vol. 6,

pp. 32-5.
Goldratt, E.M. (1990a),The Haystack Syndrome: Sifting Information from the Data Ocean?, North
River Press, Croton-on-Hudson, NY.
Goldratt, E.M. (1990b),What Is This Thing Called the Theory of Constraints and How Should It
Be Implemented?, North River Press, Croton-on-Hudson, NY.
Goldratt, E.M. (1994),It’s Not Luck, North River Press, Great Barrington, MA.
Goldratt, E.M. (1997),Critical Chain, North River Press, Great Barrington, MA.
Goldratt, E.M. and Cox, J. (1984),The Goal, North River Press, Croton-on-Hudson, NY.
Mabin, V.J., Balderstone, S.J., 2003. The performance of the theory of constraints methodology:
Analysis and discussion of successful TOC applications. Int Jrnl of Op & Prod Mnagemnt 23, 568–
595. doi:10.1108/01443570310476636
McAdam, R., Bailie, B., 2002. Business performance measures and alignment impact on strategy:
The role of business improvement models. International Journal of Operations & Production
Management 22, 972–996. doi:10.1108/01443570210440492
Montgomery, C.A., 2011. Resource-Based and Evolutionary Theories of the Firm: Towards a
Synthesis. Springer Science & Business Media.
Nave, D., 2002. How to compare six sigma, lean and the theory of constraints. Quality Progress
35, 73.
Porter, M.E., 2008. Competitive Strategy: Techniques for Analysing Industries and Competitors.
Simon and Schuster.
Group 1 !41
Analysis & Marketing

INTRODUCTION
Our task within the assignment was to take part in a computer simulation, Enginuity, where we
would take on the responsibility of managing and running a fledgling construction company and
competing against our colleagues to create the most successful business. We named our company
Future Plc and my role within the task was Strategic Marketing Director.
Enginuity is a realistic team based software simulation which allows participants to gain an insight
into the running of a UK based construction firm. Within the simulation teams were tasked with
making strategic decisions which had realistic impacting results within a simulated international
business environment.
The teams were given a construction business which was a year old and each participant was
tasked with managing the strategic operation of a particular area of the business. The challenge
lasted for 9 time periods (starting at period 4, 1 year old). Within the first 4 periods the teams were
given the opportunity to understand the software and the company operated within a closed
standardised environment. This meant that teams were able to bid for the same projects and,
providing the appropriate standard decisions were made by the team then they would successfully
win a bid. Following each period consultant reports highlighted decisions which positively or
negatively affected the success of the company position. This helped the teams to make more
informed decisions later in the task.
From period 5 onwards the teams competed against each other within the same environment,
much the same as a real-life construction would do. This meant that only the teams which adopted
the most effective strategy were the ones that made the more favourable decisions and therefore
successfully procured the projects (assuming that teams were bidding on the same projects).
In this report we will critically evaluate theories relating to strategic marketing within the business
sector. We will then critique the success of the theory within the construction sector with a
particular focus on how this was adopted by Future Plc and how it led to the success of the
business in the task. In much the same way that a real company would, Future Plc was forced to
make decisions from external influences as well. This in turn changed the strategy of the business
throughout the task. It is these influences which will also be discussed in more detail in the report
particularly in relation to marketing theory.
Also, within this report it will seek to evaluate the success of the strategies adopted with the task
and to critically analyse the success of marketing theories when relating it to the construction
industry and the Enginuity programme.
THE THEORY
The theory chosen for this report is Porter’s 3 Generic Strategies (1980, 1985). Porter argues that
in order for a company to be successful it must focus on three strategies; these are Cost
Leadership, Differentiation and Focus.
In brief the strategy of:

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I. “Cost Leadership” states that a business can use cost to gain an advantage over our
competition. By undercutting competition a business is able to win more business.
II. By adopting “Differentiation” as a strategy a business creates a perceived value for their
product or service by either doing something different or the same thing better and therefore
being able to charge more for it.
III. A “Focus” related strategy is one by which a company targets a specific market. By doing this a
business is able to service a niche in the market. It is theorised that there are advantages of
choosing one market over the other.
Fig. 1.0. Shows Porter’s Generic Strategies (1980, 1985).
The image above helps to visualises Porter’s theory more clearly. It states that a business operates
between two headings; cost advantage and differentiation. By applying these either in a broad or
narrow scope three generic strategies occur; Cost Leadership, Differentiation and Focus.
In “cost leadership” a company produces its product at a lower cost for a given quality within the
market. This means that a company sells its product at either average price in order to gain a
higher profit than that of its rivals, or it sells it at below market price to gain market share. Cost
leadership always targets a broader market and in the event of a price war the company can retain
profitability whilst competitors suffer losses. This is dependent on the company having sufficient
capital of course. As the market matures and prices decrease the companies that can produce
more cheaply for longer will remain profitability for longer than their rivals.
The firms that are most successful in cost leadership typically will have a higher access to capital
to make the investment in production assets which creates a barrier to entry that many companies
fail to overcome. Skills and expertise in manufacturing are usually higher with successful
companies and this usually includes a better distribution channel and routes to market.
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There is a risk to this strategy however. Companies with equal capital capabilities could match
manufacturing output and as technology improves costs can be driven down. Rivals may also
chose to target a narrow market; in effect carving a niche which ingrains market share and brings
down costs of manufacture.
By adopting a “differentiation” strategy a firm produces a product or service which has a

uniqueness that is valued by customers and perceived to be better than the competition. There are
many different ways that firms can differentiate themselves and their product from rival companies
(Thompson et al, 2008). This uniqueness gives consent to a company charging more. Typically this
increase in charge will cover the cost of creating the unique product or service. In order to a firm to
adopt this strategy it must typically have a strong R&D department, strong routes to market, the
ability to communicate its uniqueness and have a strong brand image. There is a risk that
competitors can emulate the product or service or perhaps even better it however.
Within a “focus” strategy a business will direct its activities towards a narrow segment (Davidson,
2001; Porter, 1980, 1985, 1987) and typically seek to achieve either a cost advantage or
differentiation. A successful firm with this strategy will usually have very strong customer loyalty
which creates a barrier to entry for other competing rivals (Allen & Helms, 2006). The risk is that
other broader focused rivals can tailor or emulate their offerings to compete directly and chip away
at market share.
EVALUATION OF THE THEORY
By adopting one strategy over another Porter argues that a business is able to gain a competitive
advantage. Porter’s theory does go some way towards explaining the strategy employed by Future
Plc during the task. From the outset the strategy adopted was one of cost leadership and narrow
market focus. By period 5 however, Future Plc was near the bottom of the league table. Clearly
undercutting prices in the market could not work in a dynamic environment such as construction.
Hambrick’s (1983) argument that a low cost strategy is difficult to implement in dynamic
environments backs this up. Further to this a young company with a low capital base and without a
strong trusted brand and reputation struggles to compete on cost. We realised that in order to be
more successful the strategy had to be adapted to compensate. By narrowing our market too
quickly and by undercutting our prices without a strong capital base we were not an attractive
proposition to clients considering which bids to accept. We changed the strategy to be broader in
market scope and more competitive in price. We then adopted a strategy of reducing market scope
slowly, therefore carving a niche more gradually meanwhile building brand reputation. By Period 7
we moved to 2nd position in the league table as a result and created a niche within the Transport
and Building & Commercial Sectors, reducing market focus on Energy and Water & Sewage.
As Future Plc discovered, and as the title of the theory suggests, Porter’s theory is “generic” in
nature and does not account for the myriad of external forces which is placed upon it, especially
within the construction sector. There are numerous changing decisions which must be made as a
result of external influences such as social, economic and political environments. Similarly when
introducing competitors into the model a business will be pushed or pulled into one of the
quadrants in order to compete effectively.
Porter does suggest that you can be located within the four quadrants however but implies that a
company should use one strategy. A company which tries to be “all things to all people” will find
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itself “stuck in the middle ground” (Porter 1980). Akan et al (2006) disagree. They explain that a
company that adopts different marketing strategies is able to react quickly to market forces and is
subsequently more successful.
Contrary to Porter, Miller (1992) also argues that it’s ok to be in the middle ground of Porter’s
model and adopt a mixture of strategies. Many small companies start off as small niche players
and gradually work their way to success through a mixture of strategies. This was closer to the
strategy adopted by Future Plc following a poor start in the Enginuity competition. This is discussed
later.
When Prajogo (2007) did a study on what made businesses successful they found that the most
successful companies were those that employed a hybrid strategy were more successful than
companies that used Porter’s approach of just one strategy. I believe this resonates closely to our
model and strategy during Enginuity too.
As mentioned earlier these opposing theories also suggest that Porter’s model only works within
certain industries such as manufacturing (Fellows 1993, Winch and Schneider 1993, Huovinen
2008). This echoed our findings within Enginuity. Adopting one single strategy would not have led
us to the success in the task that we achieved. We constantly evolved and adopted new strategies
as more environmental information became available.
It was clear from our experiences within Enginuity that there were far more external forces at work
that influenced the success of our strategy. It was understood that the Enginuity software would
simulate forces experienced in a “real life” construction business. To an extent this is true. For
example the software is programmed to consider the success of a business in completing a project
on time. To a degree these forces are complex such as whether the consultant engaged on the
project is happy to live abroad away from family during a project’s completion. Should the
consultant leave early before the project is finished because he/she is not happy with living away
from home or not being paid it can have a detrimental effect on the project’s completion time and
budget. However, these forces are far more complex in nature in reality than is represented in the
software (the human elements for example).
In the early stages of the competition we invested heavily in complementary industries with a view
to reducing our future costs. Only investing in businesses which predicted a reasonable return
initially, Future Plc invested in two businesses; Chain and Sprocket Engineering and National
Aggregate Plc. Both later were used as suppliers which aided in us being able to reduce the costs
of the projects and also bid more competitively.
Pries and Janszen (1994) argue that construction companies must be more extrovert and more
market driven to compete. Pearce (1992) agrees and believes that firms must adopt a more
creative way of thinking to attract new business, a company cannot just rely on repeat business to
come in year after year. By investing in new methods of design, construction and management
such as BIM during the task we were further able to reduce time taken to finish projects as well as
build costs and therefore were able to reduce our costs.
Some research has been carried out to assess which strategic management theory plays a part in
the construction industry. Fellows (1993) for example criticises Porter’s theory in relation to
construction stating that it is externally focused. Porter’s work is still viewed as important by others
Group 1 !45
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such as Tansey et al (2014), Ramsay (1989), Langford and Male (1991), Betts and Offori (1992) &
(1993), Tan et al (2012), Li and Ling (2012), and Budayan et al (2013) however. It is therefore still
justifiable to say that his theory applies to construction.
Tansey et al (2014) considered to what extent Porter’s generic strategies were successful in the
construction sector during the 2007 economic recession. It was identified that a cost led strategy
was most effective both inside and outside of economic turbulence. Pulaj et al. (2015) also
discovered that low cost played a part in the success of a construction business. By ensuring that
Future Plc used a lean operation method it was clear when comparing the business to other
competing firms that cost control had a large part to play in the success of the task. For example,
ensuring that the workforce were utilised effectively, creating an effective payment strategy and
utilising our supplier base effectively (such as those suppliers we had invested in previously) we
were able to keep costs down dramatically.
It is widely argued that deliberate planning is ineffective because the external environment
constantly changes (Cheah and Wong 2005). An opposing theory to Porter’s Generic Strategies is
that of “Dynamic Capabilities”, developed by Teece et al (1997), acknowledging that a firm’s
competitive advantage should stem from its ability to configure its internal and external
competence to address rapidly changing environments (Tansey et al 2014) This was supported by
Green et al (2008). Haan et al (2002) found evidence that construction firms show consistent
patterns of market strategy and core capabilities built on internal strengths. To what extent this is
true within Enginuity is unclear as the software assumed that the internal strengths were present
already.
FUTURE DIRECTION
It’s clear from the result of the Enginuity competition that the strategies employed to win the task
were successful. However, it is clear from our experience that sticking to one strategy alone did not
lead to the success of the task nor will it be when deciding the future direction of the company.
The strategy employed by Future Plc in the future should be one of cost and narrow market focus.
However, it was clear that this is only possible so long as the business retains a good brand image
as a result of positive activities in the industry (as a result of finishing projects on time, etc), bidding
competitively and controlling costs (investing in complementary industries, controlling payments
etc) as well as a good understanding of market forecasts. Currently 65% of Future Plc’s markets
are overseas. Further growth in these markets can be achieved through expansion into foreign
markets whilst keeping a narrow market scope (ie Transport and Building & Commercial sectors).
CONCLUSION
Porter’s Generic Strategies is still recognised as one the most accurate theories when analysing
the strategies of businesses. There are elements of the theory that directly related to our own
strategy which resulted in Future Plc winning the task. However it is clear when applying Porters’
theory to both our task in Enginuity and construction businesses as a whole that there are some
limitations to the theory. One of the main limitations is that it assumes that a business will chose
one strategy and stick to it. As we found within the task, external forces are fluid and rely on
adaption of strategies in order to succeed. Often strategies are not successful so a company must
be flexible and have the ability to change at short notice. It also assumes that that the influences
are all external.
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Opposing theories also work within the parameters of Enginuity and consider internal factors but to
what extent is unclear as the access to an internal environment within the parameters of a software
program is not possible. An opposing theory such as Dynamic Capabilities (Teece et al 1997)
states that the success of a business is due to both external and internal capabilities to address a
dynamic environment such as construction. This highlights the limitations that Porter’s theory has.
It should be noted that whilst the software programme used in the task was designed to emulate
the environment that a construction business would operate in, it does not go far enough to
account for the vast number of internal and external influence which face a real construction
company. In this respect the software has its limitations to. This creates its own limitations when
assessing effectively and conclusively whether any strategic theory fits.
Group 1 !47
Conclusion
By completing the Enginuity competition as leaders it could be argued that our strategy had been
successful in achieving our goal; to win the task. However, at closer inspection it is clear that we
mixed the strategies throughout the competition in order to achieve the result.
Our initial strategy of enhancing our presence in the UK market, growing the strategic value of the
business and maximising our profits was relatively successful; achieving a 12% market share
within the first few periods. By narrowing our markets and simplifying our business offering to “build
only” jobs from then onwards we were able to deliver a more niche, targeted strategy towards the
“Building & Commercial” and “Transport Sectors”, reducing our dependency in other areas. This
saw our business increase by 7% immediately in the following period.
A later deviation from this strategy to a higher risk strategy of increasing our bid costs saw Future
Plc’s market share tumble which indicated that a risk averse strategy was more successful. It was
not clear from the management report data how much of this was solely due to an increase in our
bid costs and not due to other internal or external forces such as competitor activity.
In the following period we returned to the lower risk model which reaped immediate success and
increased market share by 28% and winning 54% of bids. It also created a 42% increase in share
value. We also reduced our costs by implementing BIM and streamlining our payments,
procurement and staffing. We ensured that selecting the right expertise in projects was
undertaken. Following two further successful periods we were able to grow our capital base and
began to grow our market internationally continuing within our niche market strategy. By the end of
the competition 63% of our business was overseas however our client satisfaction reduced our
ability to increase our brand satisfaction. This was due to an increased workload and inability to
meet demand at the end.
It is clear that whilst the Enginuity program professes to create a realistic construction environment
the feedback is limited and does not take into consideration all factors within a real life situation.
The construction sector is particularly complex and cannot take account of the myriad of forces
placed upon it in the real world. To some extent this highlights the limitations of the software.
Most importantly within the competition we saw internal factors as most important in the success of
the task. Construction businesses rely on the ability of internal teams working together. The team
owned their responsibilities, worked collectively and ensured that work was completed to a high
standard on time which in turn was fundamental to the success of the task. Coupling the internal
resources we held as a group with a simplified yet strong and adaptive strategy was one of the key
reasons why we succeeded in winning the task.
References
CIOB, (2010) A REPORT EXPLORING PROCUREMENT IN THE CONSTRUCTION
INDUSTRY .The Chartered Institute of Building CIOB. Available at: https://www.ciob.org/sites/
default/files/CIOB%20research%20-
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%20Procurement%20in%20the%20Construction%20Industry%202010_1.pdf. (Accessed
16/01/2017).
Friedlob, G. and Plewa, F. (2003). Understanding return on investment. 2nd ed. New York: Wiley. 
Group 1 !49
Appendices 
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A1. Appendix One - Human Resource Management
!
(Atkinson, 1984) Core model of the ﬂexible ﬁrm
(Research Gate, 2016) ‒ An integrative model of Strategic HRM
Group 1 !51

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FUTURE - PREPARING FOR TOMORROW

PRESENTATION OF BUSINESS STRATEGY

Authors and Roles 3

Authors and Roles

Bhavin Bamboli - s151403348 - Bhavin.Bamboli@mail.bcu.ac.uk

Bhavin Bamboli - Director of Risk.

I. Capital base workload limitation,

1. DESCRIPTION OF PORTER’S GENERIC BUSINESS STRATEGIES

2. APPLICATION OF PORTER’S GENERIC BUSINESS STRATEGIES IN THE FIELD OF

3. APPLICATION OF PORTER’S GENERIC BUSINESS STRATEGIES TO ENGINUITY

SUMMARY OF THE ASSIGNED ROLE AND FUNCTIONAL STRATEGY

EVALUATION OF FUNCTIONAL PERFORMANCE AND LEARNING

Besanko, D. (2010). Economics of strategy. 1st ed. Hoboken, NJ: Wiley.

Lenz, R. (2010). Post-LBO development. 1st ed. Wiesbaden: Gabler Verlag.

Porter, M. (2014). Competitive strategy. 1st ed. London: Free Press.

Human Resource Management

Armstrong, M. And Taylor, S ( 2014) Armstrong’s Handbook of Human Resource Management

Atkinson, J. (1984) `Manpower strategies for flexible organizations', Personnel Management,1984,

The Agency Theory

THE SELECTED THEORY

Financial management is a necessary part of general administration. It is pertaining the

Weston and Brigham : Financial management “is an area of financial decision-making,

SHAREHOLDER’ WEALTH MAXIMISATION AND ITS LINK TO AGENCY THEORY

AGENCY THEORY IN CONSTRUCTION INDUSTRY

Theory applied to Enginuity

Fig [2] : Financial decision in Enginuity

Cheriyan, N. K., 2013. the commerce pedia. [Online]

Ingram, D., 2016. Managers. [Online]

BUSINESS EXPANSION THEORIES

Factor Conditions Demand Conditions

Expansion (according to Sanderson) can be achieved through acquisitions. By acquiring a

CHALLENGES AND SUCCESSES

Sanderson, E. (2006). Growing your construction business through geographic expansion.

1.THEORETICAL ASPECT OF BUSINESS IMPROVEMENT

2.THEORY OF CONSTRAINTS PRINCIPLES

3.1 PERFORMANCE MEASUREMENT:

Net profit (NP) = Throughput (T) – Operational expenses (I)

3.2 PERFORMANCE IMPROVEMENT

4.THEORY APPLIED TO ENGINUITY:

5.EFFECTIVENESS OF THE GROUP1 CONSTRUCTION STRATEGY

6.FUTURE PLC COMPANY FINANCIAL PERFORMANCE AND FUTURE DIRECTIONS

7.PERFORMANCE MEASURE AND THE THEORY OF CONSTRAINT.

1. Capital base workload limitation,

Dettmer, H.W., 1997. Goldratt’s Theory of Constraints: A Systems Approach to Continuous

Goldratt, E. (1996), “My saga to improve production”,APICS – The Performance Advantage,Vol. 6,

Analysis & Marketing

In brief the strategy of:

Fig. 1.0. Shows Porter’s Generic Strategies (1980, 1985).

By adopting a “differentiation” strategy a firm produces a product or service which has a

EVALUATION OF THE THEORY

(Research Gate, 2016) ‒ An integrative model of Strategic HRM

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Cheriyan, N. K., 2013. the commerce pedia. [Online] 

Ingram, D., 2016. Managers. [Online] 