Strategic analysis of large engineering and construction firms using financial data

This research examines the strategic performance of sixty-one large international engineering and construction (E&C) firms from the region of North America, Europe and East Asia. The objective of the study is to identify critical factors of corporate strategy that may affect the prospects of a large E&C firm. The study adopts a methodology known as fundamental analysis, which utilizes financial statements of publicly listed firms in conjunction with management theories so that conclusions can be drawn in a meaningful manner. Statistical tests are further conducted to collectively assess the firms in various aspects. Although the research project examines various themes, this paper documents the findings related to profitability. A general outlook of companies from each region is first presented. It shows that a synchronized picture of the global construction industry cannot be seen. Instead, each region exhibits different growth rates and volatilities. It is also found that the profitability of an E&C firm is not directly correlated to its size. Moreover, the variation in profitability is found to decrease with increasing firm size. All these indicate that through superior management of business portfolios, smaller-sized firms can indeed achieve a higher profitability than their larger counterparts.