As this assignment is based on case study following six questions we all have done one question each and we have come to the conclusion on the last question together. To do this assignment we had our teacher (Dr. Gajendran Kandasamy) support throughout the module by lectures, his help at the time of needs to do our assignment and his feedback on the assignment has been very supportive. We also want to thank to our classmates and friends who helped us having a better idea on how to accomplish our assignment. We also want to appreciate the help of, our receptionist Ashila, who helped us to have more time in the college apart from our class timings to do our group work. She also allowed us to spend more time (extra day) in the college to do our group studies and gave us encouragement to do our assignments.
In this assignment, the questions given in the Mott McDonald case study are answered. We tried to answer all the questions briefly in order with best of efforts. The six questions given in this case study are answered in a sequence as following:
- Explaining of Organic growth, acquisition, difference between organic growth and acquisition
- Meaning of performance pay scheme
- Analysis of Mott McDonalds values influence in its business activities
- Evaluating how a rolling five year plan helps McDonalds to identify which project the company will take on
- Evaluating the kind of growth strategy adopted by the company and with examples explaining how the strategy has helped the organization in achieving its objectives
- As a strategic consultant, what other alternative strategic measures we have recommended to the company and why we are recommending these strategic measures
The Mott McDonald Group is a UK based employee-owned company that provides engineering consultancy, design, planning, project management and consulting services to the global market; the firm employs about 14,500 staff, working in 120 countries world-wide. The Mott McDonald group is a management, engineering and development consultancy serving the public and private sectors world-wide. Mott McDonald is working hand in hand with funding agencies in the developing world to provide clean water, sanitation, universal primary education and sustainable health services. Mott McDonalds 1 billion business expands 120 countries with over 13,000 staff working in all sectors from transport, energy, buildings, water and the environment to health and education, industry and communications.
Q.1) Explain the difference between organic growth and acquisition?
The growth rate that a company can achieve by increasing output and enhancing sales is organic growth. This excludes any profits or growth acquired from takeovers, acquisitions or mergers. Takeover, acquisitions and mergers do not bring about profits generated within the company, and therefore, arenot considered organic. (www.investopedia.com)
Corporate action through which an organization or company buys most if not all of any other company's ownership stakes in order to control of that company. Acquisitions are made often because of company's growth strategy whereby it is beneficial to take over an existing firm's operations are riche compared to expanding on its own. Acquisitions are paid in cash mostly. (www.investopedia.com)
Analysis of difference between organic growth and acquisition:
Organic growth is a growth gained staying in same size. If sales grow from $150 billion the next year, this growth had organic growth of 50% but if during that year company takes over any other company means expands itself physically which had sales from $50 billion previous year, then the increase in the sales from $100 billion to $150 is growth by acquisition and there was no organic growth. In organic growth company grows internally. It expands its operations, and employee more people and gets more out put or sales. Acquisitions happen in fragmented market. At computer software group we find this for not for profit companies like charities and trade associations. For acquisition of a business you need to look for an appropriate business. When you take over or merge any business then you may have some problems to face as stake price, structure, culture and many other factors could be new for you and this need an extra ordinary effort to merge that business. While growing from inside is bit easy, you don't have to change your rules, structure or other things involved in your organization. Just looking at output or sales if expanding, then you need to employee more people or you cut the cost areas. So then you easily meet the requirements. Although it is also panic but easier than acquisition. Companies like Nokia, Toyota cars are growing organically. There is risk in taking over a business overseas than staying at home. You are unfamiliar about customs, rules, regulations and some way customer behavior. So you can face problem not for a long time but for a short time at least. So some companies prefer to grow organically rather than by taking over a new business.
Q.2) What is meant by performance pay scheme?
A) All employers want employee who perform their jobs well. However, an effective performance management system increases the likelihood that such performance will occur. A performance management system consists of the process used to identify, encourage, measure, evaluate, improve, and reward employee performance.
Motivate, inspire and energize people, recognize achievements and financial rewards do encourage people to produce results. Give people a sense of responsibility and make them feel that their actions make a difference. Communication with people frequently and praise them. This is the way employee will fulfill your dream is to share in the dream. Reward systems are the mechanisms that make this happen. However, reward systems are much more than just bonus plans and stock options. While they often include both of these incentives, they can also include awards and other origination, promotions, reassignment, non-monetary bonuses. Performance-related pay is money paid to someone relating to how well he or she works at the workplace. Car salesmen, production line workers, for example, may be paid in this way, or other commission. Business theorist Frederic Winslow Taylor was a great supporter of this method of payment, which is often referred to as PRP. Mott McDonald takes part in performance pay scheme based on the company's performance. Therefore employees put more efforts so they get more benefits and the company also grows when employee works harder. (Robert L.Mathis, John H Jackson)
Mott McDonald's Performance pay scheme system:
The Mott McDonald Group is a UK based employee-owned company that provides engineering consultancy, design, planning, project management and consulting services to the global market; the firm employs about 14,500 staff, working in 120 countries world-wide. The Mott McDonald group is a management, engineering and development consultancy serving the public and private sectors world-wide. Mott McDonald is working hand in hand with funding agencies in the developing world to provide clean water, sanitation, universal primary education and sustainable health services. Mott McDonalds 1 billion business expands 120 countries with over 13,000 staff working in all sectors from transport, energy, buildings, water and the environment to health and education, industry and communications. Their breadth of skills, services and global reach makes us one of the world's top players in delivering management, engineering and development consultancy solutions for our customers. They use our world-wide resources and experience to plan, design, procure and deliver projects on any scale. Provide management consultancy built on technical know-how help shape and implement development policies and programmes.
Mott, Hay & Anderson
Mott, Hay & Anderson was founded in 1902 by Basil Mott and David Hay, engineers who had worked together on the city and south London railway. David Anderson joined the firm in 1921 after returning from army services. The founders had two important mentors, JH Greathead and Sir Benjamin Baker.
Sir M McDonald & Partners
Sir M McDonald & Partners was founded by Sir Murdoch McDonald, a former advisor to the Ministry of Public works in Egypt, who entered into partnership with PH East (who had also been an engineer in the Egyptian Government Service) and OL Prowde, Post-merger.
The firm has expanded over the years through the acquisition of Ewbank Preece (Power & telecommunications specialists) in 1994, Cambridge Education Associates (education consultants) in 2000, Dalal Consultants (an Indian-based firm) in 2001, Franklin and Andrews (cost consultants) in 2002 and HLSP (a health practice) in 2003.
Today Mott McDonald has around 14,500 staff located in 150 offices, working on projects in over 120 countries. Mott McDonald is engaged in public and private sector development across a wide range of markets, including:
- Oil and gas
- Urban Development
Mott McDonald is a global consultancy specialist who provides expert advice within their fields of expertise. This means that it provides experts to help other businesses. It works across 120 countries and employs more than 13,000 people. At any one time, it is working on hundreds of projects around the world. It was formed in 1989 by a Merger since then the business has grown from within. It has also bought other businesses. Its projects include transport, engineering and the environment. Mott McDonald is a leader in its field. It works in both the public and private sectors.
Mott McDonalds mission sets out its long term targets.
The mission focuses on four areas:
Providing customer satisfaction
Through professional excellence
Giving commercial success and employee fulfillment.
To achieve this it employs the best experts in a range of disciplines. The business is owned by its staff, so they have their future in the company's future. That is also part of performance pay scheme and it rewards them if the company does well. To find out if it is meeting targets, the business uses customer satisfaction surveys. The feedback helps it to improve even further.
The vision outlines where the business wants to be, Mott McDonald wants to be the consultant of choice in our Global Market place. It's all because the staff wants to work with the company. It offers good career paths to recruit the best people. Although its HQ is in the UK, Mott McDonald operates across the world. It uses both UK based and local consultants and experts. (wikipedia.org)
Q.3) Analyze how Mott McDonalds values influence its business activities?
A) McDonalds Values-Mott McDonalds uses the letters in PRIDE to remind it of its values. Progress Respect Integrity Drive Excellence:
McDonald always seeks to improve living standard of community and the welfare of planet and its folks. So, its activities always create progress in its projects to lead the development of different types of professions in which it works. It aims to promote sustainable development. Like a chemical factory in China reduced it's CO2 by treating its HF-23 emission to cut the equilent of a colossal 4 million tones of CO2 every year and McDonald energy team helped it in reducing CO2. That's how McDonald helped nature and secured it from pollution.
McDonald employees people from all over the world. There are no cast, creed, colour or religion restrictions. It respects the local customs and cultures. It also motivates its employees to respect each others believes and culture or customs regardless from origin, religion or background. This is the company policy that some experties from India and Ireland from pharmaceutical staff are used on same activities in Middle East. This shows company's global strategy also.
It means that the company only promises its customers what it known it can deliver. As a result customers are satisfied and not disappointed at all. McDonald ensures that whatever it told is correct and it takes its full responsibility.
McDonalds aim for continuous progress. As it always struggle for improvement against its rivals. And this is helping it in exceeding expectations. As compared to 8.1 in 2005 and 7.8 in 2004 it achieved rating of 8.2 out of 10 for responding to its consumers needs.
Mott McDonald associates its activities with excellence. In 2007 Mott McDonald won 50 awards for its role on projects demonstrating innovation or excellence. One of the projects, the Manchester civil justice centre, won 10 awards for its contribution towards sustainable building design. (www.thetimes100.co.uk)
Q.4) Evaluate how a rolling five year plan helps McDonalds to identify which project it will take on?
A) Company operates a rolling strategy plan that looks ahead a five year period and is updated every year. The five year plan is an example of "top down" planning; company sets targets and the strategy. The business units contribute to the process from the bottom-up through their annual business plan. Because it is an employee based company, employees help to decide what areas they would like the business to focus on. Its mean that the business takes on projects that do not give a return on investment in the short term, but which helps to possession the business in the market in longer term. For example, projects in China are likely to show bigger rewards as its economy grows. The five year plan covers all areas of importance. This includes financial growth, markets, services, customers, partners, sustainability and staff development. For each of these areas company has specific business objectives.
The company makes a five years plan and sets targets, during its operation where it feels to make changes in its plan, it makes according to the situation. As they update their five year plan every year, in this way they make their strategy and plan more effective. They apply SMART objectives to their projects. They include time limit, budget, purpose and resources in their plan so they finish the project within the time and budget. For example, they finish a tunnel project in Malaysia in 2007 within given time and budget.
Q.5) Evaluate the kind of growth strategy adopted by the company and with examples explain how the strategy has helped the organization in achieving its objectives?
A) An organization can grow organically or by acquisition. Mott McDonalds adopts both strategies, but most of the time we see its expert staff works on different projects all over the world. Its projects are related with environmental challenges. For example, flood protection, water and waste. In all projects company realize on its own workers and their skills. For example, in Malaysia McDonalds engineering consultancy supported a project where flood water and traffic congestion was creating problem. They built a tunnel 9.7 km longer which diverts flood water from city centre. This way they saved cities property. The middle section of tunnel is about 3 km longer which plays a role as two-deck motorway relieves traffic congestion. When the tunnel is full with flood water, the road section closes. They designed a dual purpose section of tunnel to solve the challenge linked with the entire tunnel. McDonald worked with the local teams to solve the problem. They had some questions that what do they want to achieve, how they will know that they have achieved goal, do they have right sources and does it address the problem. And the most important "time limit" and when they analyzed they got the answer that Kulalampur needed continuous access to its business district so it should be safe from flood water and traffic problems. Company help to procure the specialized equipment for the excavation. The project solved water and traffic both problems. In UK companies managing half of wind forms and several other projects all over the world. It is using its own expert staff and their skills in all projects so that company adopts organic growth strategy.
Q.6) As a strategic consultant, what other alternative strategic measures would you have recommended to the company and why?
A) In Pakistan, company was asked to come with a hydro power project design. Along with other companies Mott McDonalds also came with its design, but unfortunately was refused because of its ordinary design and some technical faults. The news revealed by a well known newspaper tells that "The Water and Power Development Authority of (Lahore)Pakistan is stated to have awarded a contract for feasibility study of a hydropower project in Gilgit with generation capacity of 6,000 megawatt to a western blacklisted company during Musharraf era. According to sources concerned, when work on detailed contract design was begin the chairmanship of Wapda was overtaken by Tariq Hameed, who at once ordered the consultancy company to stop operations and later awarded the feasibility study to World Bank blacklisted Mott McDonald Ltd of United Kingdom, putting the project on the backburner.
The Mott McDonald formed a consortium of four companies, including Nippon Koie of Japan, Sogreah of France, Development and Management Consultant Pvt Ltd and Mott McDonald Pakistan Ltd, and entered the bidding with a new name of Mott McDonald Consortium and succeeded in obtaining feasibility contract.
The company was blacklisted by the Wapda in the context of design failure of Left Bank Outfall Drain (LBOD) weir, the sources revealed. The sources said no international funding organization would consider financing a project, designed by a consortium consisting of such companies which have been blacklisted both for design faults and on corruption charges.
Looking at this it can be said that there is a lack of co-ordination amongst the company officials and its regional representatives. If the company had designed the project after consulting its local managers in Pakistan the design would have succeeded, because their local representatives in Pakistan are well aware of the project's needs. Keeping in view the typical circumstances of the project they could give a better proposal, so the company should adopt the strategy of consulting the regional people related with the project also, if it does not then such refusals can be dangerous for the companies repute. (www.nation.com.pk)
- Robert L.Mathis, John H Jackson:
- Robert L. Mathis, Jhon Jackson Book Human Resource Management 10th edition
- www.investopedia.com: 08/07/09
- www.investopedia.com: 10/07/09
- wikipedia.org: 15/07/09
- www.thetimes100.co.uk: 18/07/09
- www.nation.com.pk: 20/07/09