Fluor Corporation Case Summary

Fluor Corporation faces four main concerns: reduced profit margins, inflexible organizational structure, unattractive work place for engineers, and cyclicity of company revenues. This paper will explain the causes and implications of those issues and then provide a recommendation to resolve this problems.
The first issue that Fluor faces is the cyclicity of revenues. Fluor provides services for firms in Manufacturing, Mining, and Oil and Gas, all of whose fortunes are dependent on which stage of the business cycle the world economy is in. As a result, economic downturns in the world economy can being potentially quite damaging for Fluor, as Fluor can face significant drops in annual revenues when firms in all those industries reduce capital

Currently only 8 percent of revenues come beyond Fluor Daniel with suggests the Fluor Global Services Division is quite miniscule in comparison. As previously explained, Fluor revenues are very cyclical and therefore Fluor needs an industry that is countercyclical to offset the declines that will arise in periods of economic decline. Government services does exactly this as when an economic downturn occurs, governments will try to stimulate the economy by spending more on government infrastructure in order to put their citizens to work and reduce unemployment. Fluor can try to take advantage of increase in spending by offering itself has viable candidate for something known as P3 projects. P3 projects are where government’s contract out the building of key public infrastructure to private sector companies in order to allow those companies whose core competency is in engineering to provide better and less costly infrastructure then the government itself could provide. It is recommended that Fluor either acquire a company who has a specialty in this area, or invest in building the core competency itself. The course of action to develop Government services depends on the list of viable candidates and the cost of the potential

Fluor needs the company to be flexible and integrated to deal with various complex issues that come up during the projects it undertakes. We recommend therefore that Fluor completes the change of the organizational structure into five strategic business units as previously stated and that each strategic business unit be a specific segment that the company operates in. For example Mining and Oil Gas should have their own divisions. In each division there should be a human resources department, sales department, IT and legal department that tailor their operations to the industry the company is operating in. This improves the ability of each segment to handle the complex issues that arise during each stage of engineering and allows each segment to operate in autonomous manner in order to capture growth opportunities that otherwise it may not have been able to if had to consistently report back to headquarters. This improves the strategic fit as each segment becomes more flexible in handling uncertainty as it can tailor its operations to what the industry requires without worrying what the impact of their decision is on other segments. It also reduces the potential conflict that may have occurred when each administrative division was treated as a cost center while Fluor Daniel was a profit center. If for example, Fluor Daniel required the IT department to