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    Assessing the Competitive Advantage of a Construction Company Essay

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    Part B

    Assume that you manage a company – ABC Construction, which your company has the

    graduated table similar to YTL. By utilizing 5 forces theoretical account ( and any other analysis tools ) , entree your

    competitory advantage in the belongings development industry.

    For this inquiry, premises are made to ABC Construction which has similar graduated table to YTL. However, to increase the competitiveness advantage of the company, I would besides wish to include other premises to ABC Construction.

    The premise will be made based on the followers:

    1. ABC Construction have other subordinates companies such as Cement Company and hotels.
    2. About the same historical old ages affecting in the building industry.
    3. Has been involved in abroad belongings development undertakings.
    4. Listed company in Bursa Malaysia and Tokyo Stock Exchange.
    5. Involve in the SoHo belongings development.

    For belongings development industry, themenace of new entrantsto ABC Construction is low because thebarriers to entrybelongings industry is high. As it required immense capital to come in this industry to buy land, machineries, tools, workss, other concern and selling activities. At this point, since ABC building has about 60 old ages of experience in these industry, the menace of new entrants is comparatively a child job which does non do any competitory disadvantages to the company. The on the job capital for the company is already strong plenty and really liquidness.

    Benefit fromeconomic systems of graduated tablein fiscal economic systems and economic systems of range, as a large building participant with long history in the industry, ABC building has increment efficiency, more trusty and can take these advantages by borrowing financess from bank at a lower involvement rates compared to the other rivals. Lower involvement rates, finally provides bigger hard currency flow and generate greater net income return. This allow capital enlargement such as can construct more units of houses or belongingss with less input costs compare to smaller graduated table rivals which gets high involvement rates in adoption.

    Apart from that, ABC building besides able to supplymerchandise distinction. Since the company has been involved in different types of concerns, the company able to use its alone accomplishments and resources to accomplish better use of land, human capitals, more appealing design in development and invention which so generate higher grosss and return in net income. Different design subject and constructs can be applied to bring forth distinction such as branded luxury residential ( 8 Conlay-KSK LAND ) , private Gatess park constructs ( Sentul Park- Sentul Raya Sdn Bhd ) , and natural elements to supply curative life styles ( Ecoworld- Eco World Development Sdn Bhd ) with its strong on the job capital. ABC Construction able to pass a big amount of money in making something new to pull their possible purchasers. ABC building able to convenience its possible client by passing a great trade of money on advertisement in the newspaper, wireless, web sites and telecasting programmes. For illustration, ECOWORLD has successful transform their company to a trade name which attract clients to value their merchandise and therefore new entryway demand more resource to get the better of truenesss and leads to less net income or even losingss.

    With its globally population and repute, ABC Construction has an add-on competitory advantages. The company can establish and sold their belongingss through distribution web either locally or internationally. Thedistribution channelfor ABC building will be high as it does non merely affect actively in Malaysia, its subordinates company besides involve actively in oversea undertakings in Singapore, Indonesia, England, Australia and China. This make the company has larger distribution channel compared to other rivals.

    In footings ofdickering power of providers, the chief stuffs for building are steel bars, formworks, concrete. The providers are non concentrated or differentiated. On the other manus, ABC Construction will hold greater advantages compared to its rivals because the company has its ain cement company and cyberspace company. The company do non necessitate to worry about the addition in monetary value for the cement and the fluctuation of the supplies. The control of cement and concrete stuff is under its ain supervising while on the other manus, other rivals has to worry about the bargaining power towards providers. Therefore, the bargaining power of providers tend to be low, less menace to send on integrating. Besides that, the company has been involved in other concern sectors every bit good, therefore they have greater dickering power to the providers for the supplies of stuffs. Bank is besides one of the of import providers in the belongings industry, as they will make up one’s mind whether to fund your undertaking or at what involvement is charged to the company. However, with the strong background of the company, this besides would non be a large job.

    Due to the floaty economic growing of Malaysia and comparatively low belongings values compared to other Asiatic state, thedickering power of purchasersin belongings industry tend to be low. Apart from that purchasers for belongingss are largely single therefore the force per unit area be given to be low. However, the increasing figure of belongings in the industry, client now do possess a menace of incorporating backward. Harmonizing to The Star Online on 16 August 2014, Malayan belongings market is consolidating because of the slower growing and the glut of high-rise condominium units ( Toh & A ; Then, 2015 ) . The belongings of dealing in Klang Valley for 2014 appear to be drop by 36.24 % compared to 2013 ( Thean, 2015 ) . Besides that, with the execution of GST, purchasers are now tend to be more careful in their disbursement. Even though the new enforced GST is non included in the residential belongingss but a comparing done by loan street shows there is a 3.41 % addition in monetary value for new residential belongingss post-GST execution ( Loan street, 2015 ) .

    As these scenario happened, the purchasers now tend to hold more bargaining power. The 2nd regulations of pollex for demand and supply stated that if demand decreases supply remains unchanged, leads to a lower monetary value. Buyer now will look for higher quality, greater services at better monetary value. However, belongings developers are ever smart, to procure their net income border, lower the property’s monetary value maneuver will non be used. They will either diminish the size of the belongings to run into the low-cost monetary value of the purchasers and besides input much more auxiliary benefit to increase the gross revenues during down clip, ABC Construction can input much more other auxiliary benefit to force the gross revenues such as exclude or lower the payment for sell and purchase understanding, offered other services such free installing of radio broadband services for a certain period for the purchasers.

    Menace of replacement merchandiseswill be Small Office Home Office ( SOHO ) , Small Office Flexible Office ( SOFO ) and Small Office Versatile Office ( SOVO ) . This type of belongings tendency had been turning recently but still non so favorable in Malaysia due to issues like it is commercial belongings where lodging loan involvement rate, public-service corporations, care and others will based on commercial rate. Therefore, the menace of replacement are low. Besides that, ABC building besides involve in the SoHo belongings development other than residential and commercial belongings development which means ABC Construction has diverse it development into different field which non merely one of the competitory advantages besides minimise the menace of replacement.

    The competitory oncompetition among existing houseswill be high. As there are a batch of large participants in the belongings industries such as Sunway Bhd, SP Setia Bhd Group, Sime Darby Property Bhd, Mah Sing Group Bhd, IOI Properties Group Bhd and many others developers. However, due to the diverse investing in different field other than building industry, ABC building has lower issue barriers compared to others rivals in the belongings industry which make them at competitory advantages. It can diverse it resources to other related field such as hotel industry, fabricating industry and substructure industry given that the company can non get by with the high competitory force per unit area scenario in belongings industry.

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