The Business Environment Surrounding the Construction Industry - Term Paper Example

Strategic Management in CnP Enterprises Introduction The construction industry has over the years served as a driving force for economic growth around the globe. This industry has played a significant role in developing the socio-economic capital of many countries around the globe. Nevertheless, the business environment surrounding the construction industry and its many players is dynamic and ever-changing. In order for organizations or companies operating in this industry to survive or maintain their competitive edge in the market, they need to be fully aware of what is taking place in the business environment surrounding the construction industry and understand the effect of relevant events taking place in this business environment (Arslan & Kivrak 2008). CNP General Builders is a privately owned construction company based in Bristol, United Kingdom. The company is known for constructing athletics and recreational facilities, nonetheless, CNP General Builders undertake all types of building works (CNP General Builders 2009). As a company operating in the construction industry, the company’s performance in this business environment is determined by key business drivers that affect the construction industry. This report will critical analyse and examine some of the key drivers in CNP General Builders’ business environment, the construction industry. In addition to this report will analyse the impact that these four key drivers have on the company’s business. Business Environment Analysis The construction industry is often considered as a fragmented industry. A fragmented industry is one in which no company has a substantial market share and is able to bring about considerable outcomes in the industry. Numerous small-medium-sized companies usually populate the fragmented industrial structure. Generally, this industry is fragmented for a wide range of reasons nevertheless, the underlying causes are based in the pre-determined, localised, project-based characteristics of construction (Langford & Male 1991). Furthermore, the construction industry is geographical dispersed with markets in both the local and international level. Some of the complexities that characterise this industry include technology, project size and the market. The construction business environment is highly competitive and a contestable market where competition operates and where the risk of an entrant company constraints the behaviour of companies particularly when it comes to their pricing policy. In addition to this, the construction industry can also be viewed as a hierarchal industry that is determined by the size of the firm. In this case, small companies tend to act as sub-contractors to big companies (Langford & Male 1991). Over the years, numerous studies have been conducted to determine success driving factors particularly in the project management area (Hyvari 2006). In the construction industry, traditional approach to success is based on the ability of a company to plan and implement projects (Abraham 2003). Research findings of Lussier (1995) and Strischek (1998) depict that some of the driving forces of success include; the company’s management practices and systems. Other research studies show that some of the driving forces of success in the construction industry include the implementation of accounting systems, training and education, control of job-site safety and the regular review and monitoring of financial statements (Strischek 1998; Gerstel 1991; Bednarz, 1997). Based on the evidence depicted in various literatures some of the key drivers of the construction business environment include; technological capability, knowledge exchange, sales and marketing and strategic management. Technological capability is one of the key drivers of the construction business environment. It is worth noting that with time, new technologies emerge that simplify and promote efficiency as far as construction operations and practices are concerned. In addition to this, technology usage enables construction companies to deliver innovative services to its clientele. Therefore, the viability of a company in the construction industry is dependent on their capability to adopt new technologies. Companies that have highly advanced technological capabilities have an upper hand in this market (Seaden & Manseau 2001). Moreover, knowledge exchange is an essential key driver in the construction business environment. For instance, interactions between researchers and construction consultants can help to push the transfer of scientific knowledge and insights to the practical construction field. Knowledge transfer in this industry stimulates and facilitates the exchange of useful information among commercial organizations and companies in this industry. In most countries, the government initiates various programmes with the aim of stimulating and facilitating knowledge sharing and cooperation between construction companies particularly contractors and architectural firms. Through these programmes governments enable players in the construction industry to share skills and knowledge with each other so as to promote sustainable competence. A good example of some of the platforms used for knowledge sharing in the construction industry includes; trade fairs, workshops, information meetings and lectures. For example, in these platforms contractors can train construction workers how to manage waste materials. Suppliers of innovative equipments and materials can also train contractors how to efficiently use new products and technologies (Bossink 2004). Smyth (2003) sets out sales and marketing as a key driver in the construction business environment. Currently, the construction business environment is highly competitive due to the constant emerge of new players in the market. Therefore, in order for companies to be successful and maintain their competitive edge in this market, they need to employ effective sales and marketing strategies. Competitive pricing and good advertisement and are some key strategies companies in the construction industry can use in order to differentiate themselves in this competitive business environment. With the inception of new marketing technologies the use of the internet as a marketing tool for construction companies has become very paramount. Electronic marketing (e-marketing) has opened new avenues for construction companies to market themselves (Arslan & Kivrak 2008). Strategic management is another key driver in the construction business environment. Strategic management plays a crucial role in the management of human resource, quality control and risk management among many other important aspects of construction operations (Arslan & Kivrak 2008). Influence of the four drivers on business These four drivers greatly influence the business and performance of CNP General Builders in the construction industry. Technological capability as one of the key drivers of the construction business environment greatly influences the overall performance of the company. As new technologies continue to emerge, construction operations also change. For centuries, the construction industry has been built around steel, mortar and hard manual labour. However, with the inception of new technologies simple things such as communication between the field and the office has been revolutionalised. For instance, technologies like Personal Digital Assistants have enabled project managers to send plans, lists or illustrations easily to field contractors. Moreover, rather than using pencil and paper, revolution in technology has enabled engineering plans to be conducted easily and efficiently by using Computer-Aided Design and Drafting systems (Ashby 2009). Furthermore, as a result of technological revolution, it is possible for project managers to use on site web-cameras to oversee the construction without necessarily being at the construction site. Technology is also impacting on the construction industry by promoting accuracy and efficiency. For instance, the use of the Global Position Systems (GPS) in the construction can help to improve speed and accuracy of the grading tractor. By using a GPS, the operator of the tractor does not have to identify a stake in the ground and manually operate the tractors, the tractor can be accurately and quickly operated since the GPS is adjusted according to help in directing the tractor (Ashby 2009). Besides this, new technologies have alleviated the need for additional manpower in the company. Therefore, companies that have highly advanced technological capabilities have an upper hand in this market (Seaden & Manseau 2001). Knowledge transfer in the construction industry also influences the overall performance of construction companies. The exchange of knowledge in this industry facilities the development of new information that can be used to initiate innovation particularly in areas such as environmental sustainability. Construction companies are responsible for a great deal of a country’s carbon emission, water consumption, landfill waste and the use of raw materials such as wood. As a result of the great impact that the construction industry has on the environment, this industry plays a crucial role in promoting environmental sustainability. Although the sole efforts made by companies to promote environmental sustainability are crucial, integrated efforts from the players in this industry can significantly promote environmental sustainability. It is only through knowledge sharing that players in this industry can learn and adapt to new ways of promoting environmental sustainability. An integrated knowledge sharing network strengthens the competency and innovative capability of this industry. In addition to this, knowledge transfer has over time enabled companies in this industry to share knowledge about technologies that can be used to enhance efficiency and effectiveness in construction operations. This has in turn led to increased capability and innovativeness in this industry (Veshosky 1998; Slaughter 1993; Barlow 2000). Sales and marketing play a crucial role in influencing the performance of construction companies. As earlier stated, the construction industry is highly competitive and in order for companies to maintain their competitive edge in this business environment, they have to employ effective sales and marketing strategies. Sales and marketing strategies employed by a company have a direct influence on the profitability and performance of a company’s business. The use of marketing strategies such as e-marketing has enabled companies to increase their marketing opportunities and capitalise on opportunities in both the local and international market (Smyth 2003; Arslan & Kivrak 2008). Lastly, strategic management greatly influences the performance of businesses in the construction industry. Strategic management leads to good corporate governance. Planning as one of the paramount practices of strategic management determines the overall success of a business since it helps to establish strategies and practices that can help businesses to realise their goals. Generally, strategic management helps businesses to monitor, control and effect positive changes in a company’s business process such as, quality control, human resource management risk management, quality control and financial management among many other functions. Conclusion This report has critical examined some of the key drivers in CNP General Builders’ business environment, the construction industry. Four key drivers of the construction industry were identified as technological capabilities, strategic management, knowledge sharing, sales and marketing. These key drivers have over the years influenced the business of CNP General Builders’ and other construction companies. For instance, strategic management helps businesses to monitor, control and effect positive changes in a company’s business process such as, quality control, human resource management risk management, quality control and financial management. Sales and marketing strategies employed by a company have a direct influence on the profitability and performance of a company’s business. Technological capabilities have impacted on the construction industry by promoting speed, accuracy and efficiency. In addition to this, knowledge sharing in this industry has facilitated the development of new information that can be used to initiate innovation particularly in areas such as environmental sustainability. References Abraham, G., 2003, Critical success factors for the construction industry. In Moleenar, R. & Chinowsky, S. Proceedings of Construction Research Congress, March 19-21, Honolulu, Hawaii. 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