Background and introduction
Balfour Beatty Construction is a commercial construction company that was formulated in 1933. The headquarter of the company is in Dallas, Texas and service office in U.S. the parent company of the Balfour Beatty Construction is Balfour Beatty which is a London based group. The group is a world class construction, services and engineering organization. The competitive and strategic position of the company can be assessed by the management tools including SWOT and PESTLE analysis. The expertise of the Balfour Beatty varies from equipping, designing, manning, management and construction of the buildings. The basic aim of the company is to expand its business at global level. There are more than 20 operating companies working under the group name Balfour Beatty.
The company requires developing a sustainable business environment by making mergers and acquisitions in all business areas. The five force model of porter is used to analyze the influence of various forces on business strategies. The strategic direction of the company has been influenced by various technological, social, political and economical factors. The company has developed a policy regarding social responsibility and has been awarded for its efforts in this area. There are about 25,000 employees working worldwide that have created many issues regarding management of human resources. The main concerned areas include health, mentoring and training, pension, and management issues. The statistics shows that there are more than 100 graduates join the firm each year. The graduates are needed to be trained and mentored which requires finances and resources.
(Construction Industry Market Review, 2003). (www.unison.org.uk )
The construction company in UK share tenth of the gross domestic products in UK. The annual revenue is about £65 bilio (www.dti.gov.uk). The industry has been ranked in top 10 construction industries in UK (Crowley,2003)
The change of government in 2010 has affected the UK marker significantly and thus the comprehensive spending review. The market activity has been reduced due to changes in government policies. There are various sectors handled by the company with different market shares including house building, infrastructure, industrial buildings, building materials and commercial construction. In 2003, the house building contributed about 38.6% of the Ballfour Beatty construction company.
About 9.2 percent of market share was contributed by the infrastructure work of the company. In industrial construction the company contributed about 5.3% in the construction market of UK. The commercial construction contributed about 18% of all construction work in the construction market. there is a wide variety of construction material including timber, cement, tiles, bricks etc. the building material market of UK has been found to be increased by 13.7% by Beatty contribution. The following diagram shows how the company has contributed to the UK market through different sectors.
The company’s market share compared to competitors has been presented in the following graph.
The owners of large scale complexes with great infrastructure assets are the biggest customers of the construction company. Most of the customers are found to address their goals by developing partnership strategies and join with the construction companies. The concerns are just associated with the assets but to the beneficial outcomes for the beneficial delivery to the communities they serve. The partners are required to be equipped with the comprehensive knowledge, vision breadth for the better view of the big picture and to help for the formulation of optimal solutions. Porter’s five forces analysis
The competition state in the industrial business can be explained through five force model presented by Porter (Porter, 1985).
Rivalry among Competitors
Considering the market capitalization Balfour Beatty is found to be the largest UK construction group. The company has four major competitors including
* Alfred McAlpine
* Taylor Woodrow
All of these companies have same target customers with the great reputation regarding satisfaction of the customers. There are about 150,000 homes purchased in UK per year. The industry experiences the £1.5billion excess of revenue per year (www.wimpeyrawdeal.co.uk ). There is high price competition within the companies in the industry.
Threat of Entrants
The identification of the probabilities and possibilities of new entrants is important because of intrusion risks made by them on profitability of existing company’s market share. The construction industry of UK has been affected by the differentiation of products, switching of costs, scale economies and government policies. The skill network report of 2006 to 2010 for construction companies in UK has stated that the output of the construction companies in UK is about 3 percent per year. There are about 2.5 million employees who are expected to join construction companies (www.constructionskills.net). Power of Suppliers
The active suppliers of UK and overseas contributions have made the market more competitive. The bid system has been adopted in this industry which works independently. The main concern to these suppliers is volume along with the amount of steel, wood and concrete. The large suppliers are not found to be affected through volume and other leverage schemes.
Bargaining Power of Buyers
The customers in UK are found to be experienced and well informed through tendering in construction business more frequently. A significant part of the procurement has not been observed to be large enough to contribute in the building services by these customers. The power of buyer can be exercised through their increasing buying behaviors (OFT, 2003)
Threat of Substitutes
The two substitutes have been considered as threats to the Balfour Beatty Construction company in UK. These substitutes include timber frame and prefabrication. In UK the word timber work was not considered as a legal process but now the activity is considered as a source of higher output values which reduces time and costs per project. The industrial, commercial and housing projects are using pre-fabricated panels.
Balfour Beatty Construction has a proven record in the developing construction business in UK. Largest construction and Design Company in UK which has took part in the development of major coastal projects in the region. UK’s leading bridge and road Construction Company which has been found to be involved in numerous state of the art projects. Balfour Beatty Construction is the prime contractor in UK for most of the reclamation and dredging work. Balfour Beatty Construction is one of the top construction group companies in the world.