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Construction industry

The construction industry consists of three major categories that include the following,

building construction, infrastructure construction in this case the construction of road and

highways and lastly specialty trades in reference to trades such as plumbing and masonry. The

construction industry ids therefore the industry that deals with the setting up of buildings, roads

and bridges. This industry without a doubt is indeed an economic investment as it directly

influences the economic development in any country where it is viewed as an economic

growth accelerating factor and invested well upon. Studies have proven a fact that in most

developed countries such as the united states of America, the construction industry has had a

huge role to play in relation to the economic n development of such nations all over r the

world().However, some people are of the opinion that the growth and development is strictly

defendant on the rate at which the economy of a country is growing and not the other way

round. These are therefore, opinions which no matter the evidence provided to support them,

cannot take away the one fact that for sure the construction industry in any developing or

any already developed countrys acts as the main facilitator and provider of the necessary

infrastructures that end up encouraging economic growth and development.

It is for this main reason that the construction industry becomes significant in the

development of any country hence the need for a country to set its priorities straight with

regards to the setting up of a conducive environment that facilitates and encourages the

citizens or foreigners to want to invest in this industry in that particular country. This is

important as countries with less efficient construction industries are bound and prone to

achieving little to no developments. Any form of construction industry is always subjected to

the quarterly and annual statements of the national accounts of the country of operations().The
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construction industry is important to a country in so many aspects; it for example acts as a

market, consuming different services and products produced by other industries while at the

same time providing various outputs that end up being consumed by other industries. It

addresses the issue of employment in a country by creating various jobs for the population of

a country to, engage in where many work as plumbers, civil engineers, foremen etc. Through

this income is generated and redistributed amongst a population resulting in a noticeable

improvement of their day to day lives. It plays a crucial part in the growth of a countries gross

domestic product and facilitating the growth of the gross fixed capital formation ()

The Turner construction company is a construction firm based in the united states of

America; being one of the largest construction firms in the country, it had a construction volume

of ten billion American dollars in the year two thousand and fourteen. I t is a subsidiary of

Hochtief, a construction firm based in Germany. The Turner construction company is credited

for having worked on various projects such as the construction of the united nations

headquarters, the Madison square garden, the Yankee stadium and so many more construction

projects across the United states of America()The following section is going to have an in

depth internal analysis on the Turner construction company and point out and discuss the

various strengths and weaknesses of this particular construction company. The Turner

construction company has a number of notable strengths as discussed below.

Ability to reduce labour costs

The total cost of any business is directly affected by the cost of labour that an enterprise incurs in

the course of business. A move to reduce the workforce might result in the a reduction on the

general cost of labour but it is important to note that this is only a short term solution to a vast
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problem as it can spell disaster in the case that an organization increases the workforce in an

instant due to demand. The Tuner construction company has been in a position to wisely

manage the cost of labour in its day today running of its operations and as a result increasing its

overall profits and competitiveness. Cost cannot be managed without the proper usage of all

the information related to both labour costs and performance as it is this information that

enables an enterprise to cut its operational costs, improve the morale of its workers and come

up with ways to improve the efficiency of the organization.

Availability of monetary assistance

Those enterprises that have no capital power are bound to collapse as a result of their failure

to settle their debts and liabilities. It is through funding and the availability of monetary capital

that any business is able to be in a position to run its day to day operations. The availability of

monetary assistance to the Tuner construction company has mad e it possible for this

construction company to be able to expand its operations across the United States of America,

through such assistance the company has been in a position to invest in modern construction

equipment, conduct training programs for its employees so as to equip them with the

necessary skills that then current construction industry requires. This has resulted in the

company ending up doing projects that are outstanding and which sell them to other

potential clients thus securing more business opportunities.

Domestic market

The United States of America being the vast country that it is provides a ready market for the

various construction services offered by the Turner construction company. This company has

made good and proper use of the domestic market as is evidenced by the fact that most of its
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construction projects are don in for in united states of America. When an enterprise makes

good use of its readily available local market then it puts itself in a position to be able to be in

business even when foreign markets seem to be uncertain and unpredictable which can be

the case some times.

High growth rate

Since its formation in the year 1902, the Turner construction company has experienced

tremendous growth. The rapid growth of the company has motivated the proprietors of the

business to have even greater faith in the firm thus having the confidence to want to put more

money and investment into the business as it has proven to be profitable venture. This

momentum of growth has seen it become one of the most reputable and most sought after

construction firms in than united states of America, thus resulting into an increase in its

customer base and profit margins

Just like any other business, the strengths of this repeatable firm face a draw back

from some of the weaknesses that Turner construction company possess as business. Though

most governments will tend to insist the paying of taxes by business be viewed and portrayed

as a noble responsibility of any business toward the government, it has proved to be a critical

weakness for the Tuner construction company. Being a firm with large gross profits every

financial year, it is by default subjected to pay higher taxes to the government which in turn

tend to reduce the profit margins of the firm().The rise of small business units that tend to

offer the same kind of services that the Tuner construction company offers in respect to the

construction industry has adversely affected the latters business as these small business units

are coming up with various strategies such as the lowering of a project cost by certain
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percentages in order to lure and entice clients to their side. This has resulted in the reduction of

the number of clients at the Tuner construction company.

Taking into considerations the different ways in which the term internationalization

can be defined, in this context shall be looked as any activities that a construction company

night choose to undertake with the sole objective of accessing foreign markets and increase its

presence in markets outside its domestic market. In the case of Tuner construction company;

so as to increase its presence in foreign markets it has come up with ways to facilitate a the

entry of its products and services into various foreign countries such as Canada. The

internationalization policy at Turner Construction Company is based on three modes of entry

namely the contractual mode, the foreign direct investment and exports. The most commonly

used mode of entry is export as it is accompanied by fewer risks as compared to the other two

modes. Here, the sale of the companys construction products and services is conducted between

the residents of that particular country and the firm itself. It is characterized by then firms

reduction in its when it comes to its commitment to the new market. Exports as an a foreign

market entry mode is relatively peculiar to reduced levels of the resources required a new firm

and protects the firm from being affected by any of its international activities ()

It also engages in the use of contractual forms where the firm establishes non equality

relations with foreign markets so as to facilitate the exchange of technology and technical

know how, this is done through the firm acquiring licenses from the relevant authorities in a

particular foreign country of their interest in order to begin their operation there. The use of

the contractual mod e of entry is make it necessary for the firm to be more committed and be

willing to share the various risks and resource that may arise in the course of operations.
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The firm also uses direct foreign investments where it shows its willingness to build a long

term association with a particular business in any foreign country of interest that eventually

gives it a certain amount of influence when it comes to the management an d running of the

said enterprise. Of all the three mode of entry, direct foreign investment requires a greater level

of commitment and more resources; it is for these very reasons that it eventually comes with

greater risks levels.

The construction industry is without a doubt a very competitive industry, this is due to

the aspect of expenses being a major determinant as to what construction company gets to

be awarded a particular tender. Research and studies have shown that those who submit the

lowest bids are the ones who are more likely to be awarded a specific tender().This

eventually results in construction firms registering small profit margins than anticipated. The

competitive advantage of any firms sets it at a different level from the others who are offering

the same kind of products or services which eventually ends up keeping that particular

enterprise alive by giving it a life line even when uncertainty arises in that particular line of

business. In the case of Tuner construction company, the us e of inexpensive raw materials,

skilled labour and managing and using operations that are efficient has helped the company

maintain a cost competitive advantage over its competitors by being able to cut down the cost

of their services to clients and at the same time maintaining a the quality and standards of

their products.

It has made use of diversity to venture into the construction of an array of structures

ranging from buildings, stadiums and peoples parks thus providing their clients with a wide
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selection to choose from at an affordable price. Differentiating their products and services from

those provided by other construction companies by making them more valuable and unique

has also helped this firm maintain a competitive advantage over its many competitors as this

has resulted in a rise in customer loyalty not only using low prices to woe clients but also

investing on extensive research to come up with new technology that it eventually uses in the

construction of its structures. On then other hand the firm employees the use and targeting of

people who plan to engage in huge projects like the federal and local administrations and

who would want to quality work that other small inexperienced construction companies in the

United states might not be in a position to offer. Such clients are always willing to cough out

a little more extra cash so that they can be in a position to secure the services of this firm.

Through the curving out of a niche for itself, the company is able to maintain a competitive

advantage over its competitors by virtue of having a prior target market.

When Tuner construction company is analyzed externally, a number of opportunities

and risks that this firm faces area uncovered, the said opportunities that the firm is more

likely to exploit include;

Growing demand

The growth in demand for the provision of construction services in the United State of

America and in the whole world creates an increase in the market boundaries for this firm an

d therefore an opportunity for it to grow and expand its tentacles in this widely competitive

industry.

Growing rates and profitability

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As the demand for construction services continues to soar up with every passing second, the

rates at which construction companies offer their services to various clients tend to increase

also thus ensuring that companies like Turner construction company do end up reaping huge

rewards after they have spent huge sums of money to invest in this industry. This has ended

up encouraging various construction firms to raise their stakes when it comes to investing

in the construction industry as they are assured and guaranteed of higher returns and profits.

Venture capital

The construction industry proving to be profitable, many small construction companies are

coming up to claim a share in this lucrative industry. However, most of these small firms do not

have enough capital to break even in this industry. Companies like Turner construction

company use this to their advantage by offering some capital to these small construction

firms that show great promise of growth with the right kind of investor and in exchange they

are given a certain percentage of equity or shares at these small construction companies.

Turner construction company is also predisposed to quite a number of risks that might end up

affecting the productivity of the firm in the case that they are not properly addressed and

solutions to the reduce and minimize these particular risks provided. Some of these risks that

Turner Construction Company is bound to face include;

Increasing interest rates

Just like any other business, Turner construction company tend to operate on loans secured to

meet the cost of service provision such as obtaining construction equipment such a cranes

and excavators through bank financing. The loans do not come cheap as a particular interest is

charged on them per annum. When the rate at which interest is charged on a particular loan
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amount increases then this firm is affected directly as its will eventually determine the

amount of loans this firm can borrow from financiers and creditors.

High cost of raw materials

Raw materials such as cement, blast and so many more are an important aspect that see to it

that the company delivers when it comes to the construction of structures by Turner

construction company. The growing prices in the price of various raw materials will force

the firm to have to increase the cost of delivering its services to its clients and a result reduce

the amount of business that it conducts.