Dealing with the threats of globalization to a construction company
To survive and prosper in the global economic system, construction companies need to formulate special strategies. Operating overseas or in several discordant countries may offer novel opportunities, but is also brings many threats. In order to conduct business successfully in international markets, construction companies need to develop certain strengths. A CEO’s decision to expand into the international market must be based on a good understanding of the threats and opportunities associated with international business, as well as, the development of company strengths relative to international activities.
Technology has proven to be a pillar of resilience in diverse fields and professions due to its ability to adapt to changes in the industries and drive real development. The construction industry may owe its origin and operation to human labor, but increased innovation has resulted in the replacement of human labor with technology. Currently, construction technology is used in almost every aspect of construction with most clients opting for contemporary buildings, roads and bridges among other constructions that can only be achieved through modern technology. Thus, for a CEO of an international construction company to surmount the threats of the international market, he or she must invest in technology. However, since cutting edge construction technology is in fact costly to acquire and maintain, alliances and joint ventures can be a good strategy for the CEO of an international construction company to explore so as to access specialized technology, foster their technological know-how and develop novel areas of using technology for construction. Indeed, an international construction company whose motivation for bidding for international work is to gain technological know-how or expertise will most certainly fail to win the bid since these nations already have construction companies that are incapable of carrying out sophisticated projects as a result of lack of cutting edge technology and expertise (Gunhan and Arditi, 2005). Thus, they require an international construction company equipped with contemporary technology and technical expertise to accomplish their complex projects.Dealing with the threats of globalization to a construction company
Foreign investment is also another option that a CEO should seriously contemplate when riding the rough waters of the international market. Having a large and diverse portfolio of foreign investors that is facilitated by privatization efforts in most countries not only enhances the credibility of an international construction company but also improves its international network or connections. This is particularly prominent in developing nations. Given the limited capital in developing countries to attain their desired rate of market expansion, these nations invite foreign investment to espouse and sustain their privatization programs. It therefore follows that privatization creates opportunities for international construction companies to undertake or carry out projects in other nations for local owners and foreign owners or multi-nationals as well (Gunhan and Arditi, 2005). This is an opportunity that a CEO can take advantage of in order to secure more construction projects in different countries.
Globalization is a phenomenon that cuts across various industries and not just the construction industry. This means that in as much as construction companies are taking their businesses to the international market, other companies are exploring this territory as well. This has resulted in the growth of multinationals that have invested billions of dollars in novel foreign operations, most of which require construction input (Gunhan and Arditi, 2005). Since most multinationals often retain the services of the construction companies that built their domestic projects, a CEO of an international construction company must form strategic partnerships with multinational companies so as to undertake their construction projects domestically, as well as, internationally. It is imperative to note that all multinationals do not ply the same trade, that is, not all multinationals fall within a specific profession or industry. While one multinational’s construction projects may involve office buildings and residential buildings, other multinationals’ construction projects may entail construction of manufacturing plants, assembly plants, recycling plants or even pipelines. In this regard, a CEO of an international construction company must ensure that his or her company is able to undertake and complete distinct construction projects for different multinationals so as to overcome the obstacles of the international market.
Gunhan, S., & Arditi, D. (2005). Factors Affecting International Construction. Journal Of Construction Engineering And Management, 131(3), 273-282. http://dx.doi.org/10.1061/(asce)0733-9364(2005)131:3(273)