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Business Environment

This Report will look into AMEC PLC and its current business performance and its ability to meet the demands of the business environment over the next five years. AMEC is a leading construction and focused supplier of high-value consultancy, engineering and project management services to the world’s energy, power and process industries. The PEST analysis examines the impact of each factor (and their interplay with each other) on the business. The results can then be used to take advantage of opportunities and to make contingency plans for threats when preparing business and strategic plans.

A SWOT analysis identifies the organisations strengths and weakness and possible opportunities and threats. It will provide information that is helpful in matching AMEC’s resources and capabilities to the competitive environment in which it operates. As such, it is instrumental in strategy formulation and selection. It is Porter’s five competitive forces that determine the intensity of competition and hence the profitability and attractiveness of an industry. The objective of corporate strategy should be to modify these competitive forces in a way that improves the position of the organization. Taking on board the Ansoff and Boston Matrix plans would help identify where in the business market AMEC stand, and how to improve

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over the next five years.

After analysing different sectors and using appropriate analysis techniques it is evident the strategies currently adopted by AMEC are allowing the organisation to operate smoothly, and will do so over the next five years. A recommendation that could be put forward to help expand the organisation in the future would be to invest in the housing sector. Taking on board the current climate, and bearing in mind that the UK is, and will eventually come out of the recession, it would be a profitable decision to invest in the housing sector.

2 Company Overview “The AMEC of today is very different from that of two or three years ago. We have a clear vision and have set clear margin improvement targets, for 2008 and 2010. We are delivering on our promises.” Samir Brikho Chief Executive of AMEC plc AMEC is a leading construction and focused supplier of high-value consultancy, engineering and project management services to the world’s energy, power and process industries. With annual revenues of over �2.5 billion, AMEC have major operations in the UK and America and work internationally for customers from the Arctic to Australia, employing some 21,000 people in more than 40 countries worldwide. AMEC compromises of three main divisions which include the Natural resources, the Power and Process and the Earth and Environment division.

Recent changes in the law have allowed AMEC to use their website to communicate with shareholders. Around two-thirds of shareholders at AMEC receive annual reports and notices of meetings by way of electronic communications, helping to make AMEC a more sustainable company. 3 Business Environment The business environment of any company and in this case AMEC is made up of the following: 1. The internal environment which deals with e.g. staff (or internal customers), office technology, wages and finance, etc. 2. The micro-environment which deals with e.g. our external customers, agents and distributors, suppliers, our competitors, etc.

3. The macro-environment which deals mainly with the external business environment e.g. Political (and legal) forces, Economic forces, Socio-cultural forces, and Technological forces. This is also known as PEST. The First logical stage is to comprehend the nature of AMEC’s business environment and its influences. For example, as the complexity of business environment conditions increase or become more dynamic, uncertainty increases. Furthermore this increase in complexity may also play a role in AMEC’s certainty or uncertainty. The PEST analysis examines the impact of each of these factors (and their interplay with each other) on the business. The results can then be used to take advantage of opportunities and to make contingency plans for threats when preparing business and strategic plans.

3.1 Political factors The political arena has a huge influence upon the regulation of businesses, and the spending power of consumers and other businesses. Government policy can play a great role in influencing the construction industry. For example, tax relief on investment projects may encourage firms to invest. And also higher minimum wages and legislation to protect workers may increase the cost of business and reduce profitability. But sometimes this is not the case as recently in UAE where foreign construction labour workers, mainly from south Asia, who were asking for a minimum wage but were not granted by the UAE Ministry of Labour because they do not want to slow down the current booming construction in that region.

3.2 Economic Factors Marketers need to consider the state of the trading economy in the short and long term; this is especially true when planning for international marketing. AMEC’s economic performance is affected by factors such as inflation, interest rates and exchange rates. There’s a strong correlation between investment spending and the rate of economic growth and future prospects. When growth is high, the demand for construction increases. When growth rates fall and the economy heads toward recession, firms cut back on new projects.

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