One method to improve the rate of return is to decrease costs of production and increase quantity of work available and offered. One method of achieve this is by setting up a merger or group with other firms (Cooper, 2013). Fletcher is a large firm and has partnerships with many smaller firms which specialise in areas where Fletcher themselves do not. Within their Infrastructure Products division they work alongside Firth Concrete (NZ) and Pacific Steel (NZ), each specialising in a separate area of the construction process and are doing this currently to build a 6 lane highway connecting SH6 and SH10 in Auckland (Kenyon, 2014) (Fletcher Building, 2014).
In order to assure an increase in the quantity of jobs available and an increase in revenue and rate of return Concrete Corp needs to be involved in a merger with other business which specialise in other areas for example design or sales. If Concrete Corp was to merge or form a group with other firms any potential developer would only need to get the one group involved in the whole process which would be better in terms of organisation and management (Parker, 2014). It would be better for Concrete Corp as being part of this group as it increases market share as new markets are made available as they are no longer just in the concrete and construction industry and are also in design and property markets.
Spending time with these other firms allows access to knowledge and skills which could be incorporated into the Concrete and construction industry. Concrete Corp could then horizontally diversify and buy other firms in the same stage of the industry as them (Cooper, 2013). Concrete Corp could buy out the design sector of the group and be a ‘one-stop-shop’ designing, building and fitting out development projects. This can be started by forming a group with other firms within the construction industry and increasing market share, jobs and revenue.
-James Bolland 300279941
Cooper, R. (2013). Horizontal, Vertical integration and Diversification. Retrieved June 5, 2014, from Rumer Cooper: https://rumercooper.wordpress.com/boa-college/the-media-sector/horizontal-vertical-integration-and-diversification/
Fletcher Building. (2014). Financial Result for the Half Year Ended 31st December 2013. Auckland: Fletcher Building.
Kenyon, P. (2014, February 13). Ramping up mega-TBM progress in Auckland. Retrieved June 5, 2014, from TunnelTalk: http://www.tunneltalk.com/New-Zealand-12Feb2014-Mega-TBM-ramping-up-speed-for-Waterview-highway-tunnel-delivery-in-Auckland.php
Parker, T. (2014, March 24). Foreign bids for NZ assets tipped to rise. Retrieved June 3, 2014, from NZ Herald: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11224928