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Expansion Of International Business In Construction Sector Assignment Sample

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Expansion Of International Business In Construction Sector 

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Discussion

Part A: Theoretical application

Key Economic Factors

Key Economic Factors considered prior to expanding or investing in the foreign country construction business. The construction industry contributes significantly towards the development of the economy of the country. Some basic objectives of the development process include the generation of output, creation of employment, re- distribution and generation of income. In Australia, the construction industry contributes significantly in driving economic activities (LadikLadika et al. 2022). This is the main infrastructure for the various industry operations. The economic factors that are generally considered are population, income growth, inflation, interest rate, consumer sentiments, technology changes and the industry activities. This basically supports the improvement in the productivity for incomes in the future, capital stock and prosperity of Australia. The factors that are considered for expanding the businesses in the overseas are as follows:

  • Fiscal Policy that basically aggregates the demand level in the economy, the economic objectives are achieved that leads to stability in the price, economic growth and price stability. The increasing demand in the services of the building and the materials for the construction of the buildings thus attracting the private and public investors for the purpose of profit earning (Tien, Phu & Chi, 2019). The maintenance and the repair work can be done quickly.
  • Ease in the business registration: The time required for the overall construction process that varies from country to country. This involves working with the expert of expansion for the mitigation of the costs and the risks are eliminated initially. The realistic time frame is set and the delays are minimized that is involved in the registration process of business in the construction industry in Australia.
  • Access towards the skilled talents in the construction sector of Australia: The skilled talents are hired to make the process of construction smoother and the potential opportunities for the lucrative business are opened up.
  • Tax regulation and employment: The tax regulations and the employment that varies in different countries (Ogunnusi et al. 2020). This basically complies with the tax requirements, employee hiring and thus the regulatory issues are not ignored.
  • Political and economic consideration: The stability of the economic and political factors are important for any type of business. The country with an infrastructure, business culture and talent pool that is required in order to make the business thrive, that however changes with the political shift.

Importance of the effective supply chain management in construction sector

The importance of the effective supply chain management on the firm’s economic performance in the construction industry of Australia seeking for oversea expansions. Without clear direction and proper communication regarding the tasks and the equipment and materials distribution will lead to failure of the project (Onat & Kucukvar, 2020 ). For the smooth operation of the construction process, it is necessary to have a supply chain that is effective. The supply chain of construction that plays a crucial part in facilitating market competition. The management of the supply chain in the construction industry that generally assists the enterprises in improving the competitiveness, controlling of different variables and factors, and profit increase in the project. It basically works as a linkage for the companies that convert the basic materials series, services or the products into the finished product for the clients. The client, designer, main contractor, sub- contractor, surveyor or supplier are the essential parts of the supply chain management in the construction industry (Li,Greenwood & Kassem). The construction process model is divided into two processes that is service process of construction and procurement process.

Procurement process: The process mainly focuses on the construction materials supply, construction site labor and the equipment. In the construction process the stakeholders that are basically involved are the provider of the materials, equipment provider, labors, wholesalers, subcontractors and the contractors. This chain is called the chain of procurement.

Service process of construction: In this process that basically deals with the clients, designers, architects, contractors, engineers and the builders that have formed a chain also known as the chain of construction. The model has explained the activities of the supply chain that are required to be managed through a separate dataset of SCM that are linked with the database of the central project. Only this support level can control and plan the construction process complexity in the proposed project.

There are various paradigms in the process of supply chain (Hu & Liu, 2018 ). This basically includes functional paradigm, procurement paradigm, transportation and logistics paradigm, strategic paradigm and logistic paradigm.

Main themes in the management of the Supply chain.

  • The value of the customer is improved and the reduction of costs.
  • The relationship chain is managed strategically.
  • The product, flow of funds and the information are synchronized.
  • Innovation, competitiveness and market forces.

The SCM is important considering some of the important factors. This helps in reducing the development time of the product, the product quality is improved, the lead time and the production cost reduction can be made possible due to SCM (Struthers & Strachan, 2019). Both long term and short term benefits are acquired in the construction sector due to proper implementation of the techniques of SCM. This helps in gaining enough revenue due to the use of innovative tools in the SCM process. The supply chain that is organized efficiently results in lower cost of transaction and makes it highly competitive in the global market due to transactions internalization between the various stakeholders in the chain through coordination and cooperation (Ratnasabapathy, Alashwal & Perera, 2020 ). The implementation of the SCM process will help in reduction of the bureaucracy in the residential type of construction firms that provides understanding of the design innovation, demand market data, economical in resource utilization and various skills, flexibility and the safety of the process, team working and the worker motivation is improved. The planning process could be made easier by the planning process. This helps in providing better services, reduce the paperwork, reduce inventories and reduces the cost of transportation.

Figure 1: Model of Supply chain

(Source: https://www.ijeat.org)

Part B: Report to client

Comparison between the two countries on the basis of economic factors

China and Australia have higher financial and economic linkages in the construction sector. However, they both are dynamic in the growth of the economy, Australia is a higher income country with an advanced economy in contrast, China is the country that is middle income. In Australia that is an export centered country but China is an importer. The service center of China is expanding rapidly in some particular segments like education, tourism and other households. However, Australia holds a stronger position as a service supplier. The percentage GDP contributed for domestic demand is in various sectors. In which Australia's GDP is 57.2% and that of China is 53.5% (Chippagiri et al. 2022). The contribution towards GDP due to trade in various types of exports and imports. The share of China to become the exporter of Australia have tripled significantly and the import share have doubled in the time period. Other trading partners that are major are replaced by China in order to be the destination for export of Australia.

Investment Opportunities for construction business of engineering

According to the data obtained, Australia is one of the leading exporting countries that have contributed significantly in the economic development of the country. There are various factors that make the investors invest in the country (Newman et al. 2020). These creations will include increasing profits or sales of the country, entering into the market that is growing rapidly, cost reduction, foothold in the economic unions, the domestic market is protected, foreign markets are protected, acquiring managerial and technological skills. During 2020, the gross profit that has been earned from the construction business industry in Australia that have contributed towards 7.9 billion dollars. The government has invested significantly in the development of the infrastructure in the country. In the country significant investments are done by the territory and the state government. The powerful credentials of the economy in Australia, transparent environment business and substantial pipeline of projects are the ideal conditions that are mostly preferred by various companies for expanding their business in the country. These factors helped the country towards construction, finance, and operating major assets of the infrastructure.

Market size of Australia

Figure 2: Market size of Australia

(Source: https://www.google.com)

The buoyant economy of Australia, the growth of the population and increase in the footprint of trade that facilitates investment opportunities. There are various factors like political stability, the regulatory system that is transparent and the governance framework that is sound and easy in doing business (Biswas et al. 2021). These factors provide confidence for establishing the business in the country and the stable environment for the purpose of investment. In order to support the engagement of various industries on the major project that have significantly contributed towards economic growth of the country. A list that is accessible to the public is made that gives an overview of the major projects works that are required to be performed in the whole year span. This helps in maintaining transparency in the country. Thus a transparent and accurate view is made to the investors and the opportunities in the future.

Recommendation of the country that offers opportunities for international growth

Australia provides wider opportunities for international growth in the business. It provides a stable environment for the business. There are wider opportunities for investment and the destination is preferred mostly for expanding internationally for the purpose of business. The international expansion can only be achieved by the following factors that includes the opportunity for growth, investigation of the franchising for the purpose of global expansion, it is required to evaluate the international business of the competitor and dedicating appropriate procedures and budget for the construction projects (Van Barneveld et al. 2020). The construction business can be expanded globally by considering the following factors that includes resource availability, specialized skills, flexibility in pricing, support for the team, saturated markets and the opportunities for partnership.

  • Availability of resources: The construction industry that is aimed towards expansion should assess that it has enough resources available for the purpose of expansion. There are various costs that are associated with the expansion that is globally. This divides the focus of the company and the present management practices are stressed out (Pham et al. 2021). A stable firm of construction can easily handle these stresses out in the expansion process.
  • Specialized skills: The right manager is selected for the entire process that basically sends them to various continents. The manager with the required skills set is selected who can perform the tasks in an efficient manner and thus contributes towards revenue generation.
  • Team Support: The firm for construction is involved directly in the construction project, the decision is required to be supported by the entire team. Confusion or resentment in the direction of the firm at any level among various employees that may lead to poor performance in the work. A plan for international growth and the benefits of it is presented in order to gain the support of the team.
  • Price flexibility: The budget of everything that generally varies for various countries. The cost of labor and materials also vary that makes the process complex.

Taking all these factors into consideration it can be clearly stated that Australia will be the best place for the expansion of the construction business in comparison to China (Ma et al. 2020). As the resources are available that are required for the construction purpose, the prices of the materials are stable, skilled laborers and employees are available in the region and the support of the team. These factors have made the country suitable for the expansion of the overseas business in the country.

Appropriate model of business in the coastwise

The business model refers to the plan of the company in the making of the profit. The services or the products are identified generally that helps in the selling of the businesses. The target market is identified for the purpose and the expenses are anticipated. The models of business are crucial. It basically helps the developing and new countries for the investment attraction, talent recruitment and motivation to the management and the staff (Stanitsas, Kirytopoulos &Leopoulos, 2021 ). The model of business is the core strategy that helps in doing the business with profit earning. On the evaluation of the models in the business that allows the investors to examine whether the product obtained matches the requirement in the market.

Investment of China in construction sector

Figure 3: Investment of China in construction sector

(Source: https://www.google.com)

Risk Assessment for the expansion of coastwise and the strategies for risks reduction

There are various risks that are associated while expanding the business globally. These issues include international politics, international culture, international trade and international financial institutions and markets. There are various risks that are associated in the business market expansion in the construction sector. The risks that can occur are the exchange risks, this occurs mainly due to the diversification of currency in the market. The assets or activities of various construction firms that basically impose liability costs for different currency, thus the exchange rate impact is reduced. The entry mode in the internationalization of the business. The risks that are involved in international construction are the business risks (Shooshtarian et al. 2019). The risks in the business relating to sustainability on the long term basis. The risks in the business are mainly due to product decisions and the services that are offered. The risks are categorized into two types, this includes pure risks and speculative risks. The alternative risk includes external and internal risk types. There are various technologies for the mitigation of the risks. This basically includes the Delphi technique, probability matrix. Delphi technique: This is a type of brainstorming of risks that focuses majorly on the opinion of the experts for the identification, analysis and the risks are evaluated on the anonymous basis.

Risk Assessment Matrix

Figure 4: Risk Assessment Matrix

(Source: https://www.ripublication.com)

Innovation adopted in the coastwise that provides competitive advantage

Innovation capability is the main factor towards providing the competitive advantage by perceiving or discovering better opportunities for trade in the market. There are various technologies that contribute significantly towards expansion of business in the construction sector. This includes the BIM technology. The collaborative process of designing and planning of the building is only facilitated by using the technology. This basically involves the involvement of the multiple stakeholders in the construction process that basically involves architects, builders, clients and the engineers. In the traditional method, the real time are difficult to visualize (Stanford, 2018). The advanced tool of BIM that provides various solutions for the databases. The BIM technology helps in the management of the various sectors of the construction process. This basically involves cost management, schedule management, budget estimation, design and planning and also facilitates communication between different stakeholders in the construction process. The management of the construction project is done by using various tools, this includes software that is cloud based that mainly focuses on the cost, timer and construction. The algorithms that are AI predictive for understanding the feasibility of the project (Shooshtarian et al. 2020). After the approval the milestones are settled by the manager and the resource distribution is performed. These technologies and tools that help in data storage of large volume and the transparency is maintained. This helps in tracking of the actual and expected outcomes of the various tasks of the project.

Conclusion

From the study it can be concluded that the construction industry plays an important role in the economic development of the country. There are various economic factors that are required to be considered for the expansion of business in the foreign market and the factors that basically attract the contractors to make investment in the construction sector. The economic factors that are basically considered for driving the comparison between two countries are income growth, inflation, technology and various technologies. SCM helps in reducing the development time of the product, the product quality is improved, and the lead time and the production cost reduction. The fiscal policy that basically aggregates the level of demand in the economy helps in maintaining the stability of price in the construction sector. The management of the supply chain that plays a crucial role in the smoothie operation of the process of construction. This helps in reducing the development time of the product, the product quality is improved, the lead time and the production cost reduction can be made possible due to SCM. The various technologies that are adapted for risk reduction are the BIM and Delphi Method. The various risks involved are difficulty in the exchange rate of currency that makes the business expansion complex. The risks are related to their political instability and social issues. This helps in maintaining a good business environment. Australia has various factors that make it a suitable place for business expansion in the construction sector. Resource availability, price flexibility, team support and specialized skills that are available particularly in the country. Thus, the Australia is selected as the preferred location for business expansion.

Reference list

Journals

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Chippagiri, R., Bras, A., Sharma, D., & Ralegaonkar, R. V. (2022). Technological and Sustainable Perception on the Advancements of Prefabrication in Construction Industry. Energies15(20), 7548. Retrieved from: https://www.mdpi.com/1996-1073/15/20/7548/pdf [Retrieved on: 18.10.22]

Hu, X., & Liu, C. (2018). Measuring efficiency, effectiveness and overall performance in the Chinese construction industry. Engineering, Construction and Architectural Management25(6), 780-797. Retrieved from: https://researchsystem.canberra.edu.au/ws/files/33170774/10_1108_ECAM_06_2016_0131.pdf [Retrieved on: 18.10.22]

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