What is Fluor’s strategy? (3 words or less) Briefly explain and support your ans

Question

What is Fluor’s strategy? (3 words or less) Briefly explain and support your answer. (Less than one page, including the 3 words)

below is a part of the case:

7.2 Current Strategies: The Fluor Daniel SBU. A new corporate strategy was announced at the Fluor annual meeting in March 1999. The strategic plan aims to develop greater selectivity in the work undertaken. Reduction of the organisational structure into five SBUs provides a narrower focus on specific markets. To screen out marginal profit projects, Fluor Corporation will set specific profitability hurdle rates that prospective projects must clear prior to the commitment of resources. Hurdle rates will be set to meet Fluor Corporation’s five-year financial goals of increasing return on operating assets from 9% in 1998 to 13% and achieving a sustainable revenue growth rate of 10%. Low margin business areas will be contracted out, unless they represent strategic opportunities. Phil Carroll, Fluor Corporation CEO, stated that the intent of this strategy is to move away from Fluor Daniel’s traditional approach of accepting any project that provides marginal profit in order to preserve staffing levels. This approach in the past has caused the growth of corporate infrastructure supported by low profit projects.

This strategy will affect the manner in which the mining SBU performs work. In the past, engineering studies were often seen as loss-leaders into projects that were anticipated to escalate beyond engineering services. By performing the initial study work, the firm was able not only to develop a relationship with the client, but also to gain an inside understanding of the risks it would undertake in the EPC or EPCM contract when it was opened to bid.

Fluor Daniel estimates that targeting key, profitable clients is expected to reduce the revenues to $US 6B from the recent levels of $US 10 to 12B. In effect, enforcing a minimum rate of return is a means of downsizing through a free market mechanism. Rather than attempt to ascertain which businesses to eliminate, which to cull, and which to nurture, opportunities will be sought through the process of elimination.

Fluor Daniel also plans to create a leaner organisation, reducing operating costs by $US 160M. By the end of this year, 15 offices will be closed, resulting in 4,000 project and 1,000 overhead positions being eliminated. A one-time charge of $US 130M will be taken to make these changes. In the mining group, this has resulted in the closure of the Denver office.

Explanation / Answer

On conducting an ongoing performance review of our sub-custodians, intended to recognize any everyday working issues. This works in conjunction with a formal yearly administration audit. This joins the aftereffects of the progressing survey and particularly assesses maybe 100 of the key focuses in the administration understanding. With the end goal for sub-custodians to be viewed as satisfactory, we oblige them to meet or surpass our basic administration criteria, those that are important for us to convey a center item to our customers. At that point we assess their extra administrations. The audit procedure creates an administration change get ready for each sub-custodian, which are occasionally inspected by our senior administration, permitting both Northern and the sub-custodian to concentrate on the territories for administration change.

CCF experienced a full survey in March this year. Obviously, it beat both our basic administration criteria and our general administration necessities. CCF is especially solid in the planning and substance of its announcing. The fundamental ranges we might want to see some change is the improvement of certain money administration items. Different ranges where we are especially glad about CCF are their adaptability and the simplicity of openness to the senior administration. This continually exhibits noteworthy continuous customer duty.

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