FINANCIAL ANALYSIS

Financial Analysis

Financial Analysis

Background To The Company

AMEC Plc, the international engineering service company has developed from its roots as a stone mason based in the UK throughout the 1940s, to the present day international player that provides design, task consignment and maintenance support solutions to its clients inside the Oil & Gas, Transport, Industrial, Infrastructure and Regional service sectors.

 

Products And Processes

This international expansion has been propelled through an intentional strategy of organic development as well as the respective amalgamation and acquisition of the European company SPIE and the North American company AGRA. Subsequently AMEC's organisational structure is split up into operating business units on a geographic or 'dispersed' (Pettinger, 2002) basis.

The very meaning of the phrase dispersed i.e. to scatter or diffuse highlights the new challenges that the company faces due to its international expansion, and therefore the inevitable increase in the fragmentation of functional, divisional and geographic boundaries.

 Competitors And Policies

In this global era there have been many debates about how an organisation should manage the demands of international pressures with most focusing on how structural mechanisms result organisational and management capability. As organisations augment in size - 'there is a greater require for a carefully designed and purposeful pattern of organisation.' (Mullins, 1999)

It has already been established that AMEC's structure is split up into operating business units in a geographically dispersed basis (See below). Each business unit has a high stage of autonomy over the activity and projects that it undertakes and so operates as individual 'profit centres'. This structure has only been in result since January 2002 after the board of directors revised the management structure in anticipation of farther organic development and the acquisition of SPIE. Therefore AMEC's business units are freshly managed on a decentralised basis, where the day-to-day management of these operations is devolved to each business leader, so that they are empowered to take necessary actions to rendezvous the operational objectives set for each business unit by the board.

AMEC's inherent philosophy behind this structure is the advancement of entrepreneurial spirit. The Board recognises the complexity of the company's size, its wide-ranging activities, variety of customers and geographic dispersion. The board believes that the only way to manage this complexity is through the decentralization not only of business units but also of decision-making:

'On a daily basis our persons face many demands for decisions to be made in support of our goals. We encourage an entrepreneurial approach to this challenge through the decentralisation of decision making inside a clearly characterised principle framework. This approach offers 'local' managers and their teams the opening to take responsibility for concluding how to achieve their business targets inside the parameters the company has set as its basis for corporate governance.' (AMEC, 2003)

It would seem then that AMEC conform to the decentralisation school of considered suggested by, amongst others, Drucker (1988), Handy (1992) and Halal (1994) but what is decentralisation and does it really create an entrepreneurial approach?

 

Review of Management Accounting

Management accounting is the agency of accounting designed ...