International Expansion Decision for Construction

Companies
Suat Gunhan, A.M.ASCE,1 and David Arditi, M.ASCE2
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Abstract: There exist several reasons for construction firms to expand their business into international markets. But the complex
international environment is affected by diverse factors and creates risks that are not well understood by companies that are active mostly
in domestic markets. It is therefore essential for construction companies to follow a disciplined and well-informed strategy when deciding
whether to enter international markets. Company strengths relative to conducting business in international markets, the threats and
opportunities associated with overseas work, and the costs and benefits of undertaking construction projects in specific countries need to
be considered in this decision. The interactions between the complex factors can be structured in a model that can help one to make a
rational judgment. The International Expansion Decision Model developed in this study is based on the Analytic Hierarchy Process 共AHP兲
improved by the addition of a Delphi survey. The main objective of this research study is to facilitate the entry decision into foreign
markets and to highlight the importance of the factors involved in this decision. This study is of relevance to practitioners as it allows
executives of construction companies to test if their company is ready for expansion into international markets in general and into a
specific country in particular. It is also of relevance to researchers as it demonstrates the successful use of the combined Delphi and AHP
methods.
DOI: 10.1061/共ASCE兲0733-9364共2005兲131:8共928兲
CE Database subject headings: Construction industry; Risk management; Engineering firms; Foreign countries.

Introduction be described as complex, uncertain, and risky. There are prospects

Over the past several years, significant market-oriented economic
reforms mainly in the areas of foreign trade and investment have
resulted in a rapid increase in cross-border mergers and acquisi-
tions, direct investments in infrastructure development, a greater
need for consulting services, the international movement of labor
and physical assets, and the development of emerging capital
markets 共Ramcharran 1999兲. Most economists agree that increas-
ing openness and globalization brings all around benefits 共Raftery
and Pasadilla 1998兲.
The growth of multinationals in truly global operations has
been an important factor in the internationalization of construc-
tion. The lowering of trade barriers, the movements of funds, and
the setting up of new operations globally have created a platform
for interested construction companies to follow and exploit. By
1993, it was reported that multinationals had invested $23 billion
in new foreign operations, much of it requiring construction input
共Mawhinney 2001兲.
The international market for construction-related services can
1
Project Manager, Turner Construction Co., 55 East Monroe St., Suite
3100, Chicago, IL 60603. E-mail: sgunhan@tcco.com
2
Professor, Illinois Institute of Technology, Dept. of Civil and
Architectural Engineering, Chicago, IL 60616. E-mail: arditi@iit.edu
Note. Discussion open until January 1, 2006. Separate discussions
must be submitted for individual papers. To extend the closing date by
one month, a written request must be filed with the ASCE Managing
Editor. The manuscript for this paper was submitted for review and pos-
sible publication on December 23, 2003; approved on January 31, 2005.
This paper is part of the Journal of Construction Engineering and Man-
agement, Vol. 131, No. 8, August 1, 2005. ©ASCE, ISSN 0733-9364/
2005/8-928–937/$25.00.
for sizeable growth and profits for organizations that enter the
global arena just as there is a great potential for failure 共McCon-
ville 1996兲. International work is unusual and challenging. Ac-
cording to Kangari and Lucas 共1997兲, the difficulties are related to
client communications, understanding a new culture, avoiding
local politics, and supervising a diverse group of professionals.
Interactions between complex factors can be structured in a
model that can help contractors in making a rational decision to
expand or not to expand into international markets. The factors
involved in making this decision have social, economic, and po-
litical dimensions. The objective of the study presented in this
paper is to develop a decision-making model for construction
firms that intend to expand their business into the international
arena. This model enables construction companies to test them-
selves relative to conducting international business in general, and
to undertaking construction projects in a specific country in par-
ticular.
Methodology
The combined use of the analytic hierarchy process 共AHP兲 and
Delphi is an original approach that was explored in this study.
AHP is a general theory of measurement that is based on the
innate human ability to use information and experience to esti-
mate relative magnitudes of tangible and intangible factors
through paired comparisons 共Saaty 1994兲. It is used to derive ratio
scales from both discrete and continuous paired comparisons.
AHP enables decision makers to represent the simultaneous inter-
action of many factors in complex unstructured situations. It helps
them to identify and set priorities on the basis of their objectives

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 and their knowledge and experience of each problem. It reflects
the simple intuitive way to deal with problems, and it streamlines
the process by providing a structured approach to decision mak-
ing 共Saaty 1999兲.
The Delphi Method, on the other hand, is an exercise in group
communication among a panel of geographically dispersed ex-
perts. Delphi replaces direct confrontation and debate by a care-
fully planned orderly program of sequential individual question-
naires sent to a preselected panel of experts 共Brown 1968兲. The
series of questionnaires is interspersed with feedback derived
from the respondents 共Mitchell 1991兲. These questionnaires are
designed to elicit and develop individual responses to the prob-
lems posed and to enable the experts to refine their views 共Adler
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and Ziglio 1996兲. The use of a statistical group response assures

that the opinion of every member of the group is represented in
the final response 共Dalkey et al. 1972兲.
The Delphi Process was administered to solicit information
about the pairwise comparisons required by AHP. Experts were
asked to make relative comparisons between pairs of factors using
a 1 to 9 scale where 1 denotes the pair of factors carry equal
importance while 9 means one of the factors is very much more
important than the other 共Saaty 1999兲.
Fifty-four U.S.-based international construction companies
with minimum $10 million in revenue that ranked in the top 225
international contractors listed by Engineering News-Record
共ENR兲 共2000兲 were invited to participate in the Delphi survey.
Seventeen companies accepted the invitation and were sent a
mail-in questionnaire. Twelve of the 17 returned the questionnaire
administered in the first round, effectively constituting a rate of
response of 22% of the original population of 54 companies. Con-
sidering the fact that company executives were asked to respond
to an eight-page questionnaire composed of cumbersome pairwise
comparisons, the response rate of 22% is quite satisfactory. In the
second round, the questionnaires were remailed to the same 12
respondents along with the median values of the results obtained
in the first round. The experts on the panel were also supplied
with their own answers to the questions in the first round. They
were asked to reconsider their answers in the light of the infor-
mation collected in the first round. Ten out of the 12 original
respondents responded to the second round.
Convergence between two Delphi rounds was monitored to see
if consensus between panel experts was achieved. Consensus sim-
ply means general agreement. According to Dalkey et al. 共1972兲,
the greatest indication of convergence between rounds is the de-
crease in response variability from one round to the next. That is
why the standard deviations of the factors in the first and second
rounds were observed in this study. General agreement is
achieved if the standard deviation decreases between one round to
the next. Several studies have examined how many rounds are
required for responses to stabilize. Brockhaus and Mickelsen
共1977兲 report that most studies contain three or fewer iterations.
Dietz 共1987兲 contends that most changes in Delphi response occur
in the first two rounds. Other researchers too have reported that
not much is gained in conventional Delphi by iterating more than
twice. In fact, a highly suggestive outcome of Dalkey et al. 共1972兲
experiment was that answers were most accurate on round two
and actually became less accurate on subsequent rounds. There is,
then, a move away from multiple-round Delphi toward a view
that two rounds are sufficient. Indeed, according to Mitchell
共1991兲, the number of rounds needs to be as few as possible;
otherwise fatigue and time pressure will result in high panel at-
trition.
The median values obtained in the second round of the Delphi
Fig. 1. Flow chart of the International Expansion Decision Model
survey were used as input into EXPERT CHOICE, a group meta
decision support software product based on AHP. EXPERT
CHOICE calculated the relative weights of the factors. According
to Saaty 共1999兲, the consistency ratio of the results should be 10%
or less. If it is not, the quality of information should be
improved—perhaps by revising the manner in which the ques-
tions are posed to make the pairwise comparisons. The reason
why a Delphi survey was conducted to collect information in this
study was to ensure that the lowest possible consistency ratio was
obtained. The expectation was that convergence in responses will
be reached through the Delphi process and this information in
turn will result in consistent findings. If these measures fail to
achieve consistency, it is likely that the problem has not been
accurately structured—that is, similar elements have not been
grouped under a meaningful criterion. It is important that consis-
tency ratios in AHP modeling are below 10% as consistency re-
flects the quality of judgments.
International Expansion Decision Model
The International Expansion Decision Model enables construction
companies to make a decision relative to expanding their business
into international markets and into a particular country. This is
achieved in a two-step process presented in Fig. 1. In the first
step, the company decides whether it needs to expand into inter-
national markets, and whether it has the resources and organiza-
tion to realize such an expansion. This step involves an internal
and an external readiness test. If the outcome in the first step is
positive, then in the second step, the model allows the company to
test if the benefits of conducting business in a specific country
exceed the disbenefits. If the outcome is positive, the model rec-
ommends the most appropriate entry mode.

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Fig. 2. Tasks involved in internal readiness test

Internal Readiness
The first step of the model tests whether a construction company
is strong enough to expand into international markets. The top
part of Fig. 2 shows the tasks performed in developing the inter-
nal readiness test. First, a two-round Delphi process was used to
collect the differences in importance between pairs of company
strength factors. These strength factors are presented in Table 1
and are not country specific. They were determined after an ex-
tensive literature survey. A detailed discussion of these factors can
be found in Gunhan and Arditi 共2005兲. The mean standard devia-
tions of company strengths were computed for each Delphi round
and compared with each other. Most of the differences in the
standard deviations were in the expected direction, such that con-
vergence occurred between the first two rounds in 20 pairwise
comparisons out of 21 共Table 2兲.
The median values obtained in the second round from pairwise
comparisons of company strengths were plugged into EXPERT
CHOICE 共AHP-based computer program兲. An overall consistency
ratio of 0.06 was obtained 共Table 2兲. This consistency ratio is less
than the 0.10 threshold recommended by Saaty 共1999兲 and indi-
cates that all judgments are logically consistent. Therefore, the
relative weights 共WSi兲 assigned by the program to each factor
were used in the subsequent steps of the model. They are pre-
sented in Table 3.
In addition to the pairwise comparison of the company
strength factors, the respondents were asked to rate each factor in
a Delphi process by using a 1–5 scale, where 1 denotes no im-
portance and 5 very high importance in the current economic,
social, and political environment. The median value obtained for
each factor at the end of the Delphi process is called the “mean
universal rating 共URSi兲” and was used to calculate a threshold
value. The threshold value represents the minimum rating that a
company should have to pass the internal readiness test. The
mean universal ratings 共URSi兲 for each factor are multiplied with
the factors’ respective relative weights 共WSi兲 obtained in the pre-
ceding step. The sum of these weighted ratings constitutes the
threshold value 共TS兲.

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 Table 1. Strengths of Construction Companies Relative to International Table 3. Relative Weights of Factors
Construction
Relative weights
Variable Definition from analytical
No. Model factors hierarchy process
Project management Ability to complete projects on time,
capability within budget and quality standards. Company strengths W Si
Financial strength Ability to raise and/or manage the needed 1 Project management expertise 16.90
financing. 2 Financial strength 8.10
Specialist expertise Competitive advantage in technological 3 Specialist expertise 19.40
frontiers and niches. 4 International network 13.00
International network Connections in foreign countries. 5 Track record 23.80
Track record Successfully completed projects in the past. 6 Technology level 11.50
Technology level Knowledge and expertise for technically
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7 Equipment, material, labor support 7.30

sophisticated projects.
Total weights of strength factors 100.00
Equipment, material, labor Ability to commit resources
support Threats relative to international markets W Ti
1 Inflation and currency fluctuation 13.30
2 Interest rate increase 12.80
7 3 Shortage of financial resources 19.10
TS = 兺
i=1
共URS ⫻ WS 兲
i i
共1兲 4 Bribery in the host country 9.00
5 Foreign competitors in the host country 11.90
The bottom part of Fig. 2 shows how the internal readiness test 6 Cultural differences 9.30
is conducted by a user. The user is the executive of a company 7 Loss of key employees 24.60
that is considering international expansion. To obtain the total Total weight of threat factors 100.00
weighted rating of strengths 共WRs兲, the user rates each factor in Opportunities presented by international WO j
the context of the company in question by using a Likert scale. markets
These ratings 共RSi兲 are then multiplied with their respective rela- 1 Technological advancement 6.30
tive weights 共WSi兲 to get the weighted ratings. The sum of these 2 Globalization and openness of markets 16.40
weighted ratings constitutes the score for the company in question 3 Availability of new service areas 10.90
7 4 Increased long-term profitability 28.70
WRS = 兺 共RS ⫻ WS 兲
i i
共2兲 5 Privatization in emerging economies 8.90
i=1 6 Beneficiary international agreements 9.60
The total WR of the strengths is then compared against the 7 Maintain shareholders’ return 19.20
threshold value. Total weight of opportunity factors 100.00
Benefits of conducting business in a W Bi
WRS 艌 ? TS 共3兲 particular country
In order for a company to pass the internal readiness test, the 1 Prestige 3.20
total weighted rating of its strengths has to be greater than the 2 Business expansion 18.70
threshold value. If a company qualifies in the internal readiness 3 Geographical expansion 12.40
test, an external readiness test is conducted next to explore the 4 Tapping new and booming markets 24.30
effects on the company of the potential threats and opportunities 5 Protecting the company against cycles 16.10
in international markets. 6 Competitive use of resource 11.20
7 Competitive advantage 14.10
Total weight of benefit factors 100.00
Table 2. Convergence and Consistency Test Results
Costs of conducting business in a W Ci
Occurrence of particular country
convergence of 1 Economic risks 14.50
pairwise
2 Political risks 8.40
comparisons
in the two Consistency 3 Financial risks 32.70
Factors Delphi rounds ratio 4 Operational risks-Entry barriers 6.70
5 Taxation 5.90
Company strengths relative to 20 out of 21 0.06
6 Legal environment of host country 6.80
international business
7 Security risks 25.00
Threats relative to international 20 out of 21 0.09
markets Total weight of cost factors 100.00
Opportunities presented by 20 out of 21 0.03 International expansion modes W Ei
international markets 1 Joint venture 63.70
Benefits of conducting business 17 out of 21 0.02 2 Wholly owned subsidiary 25.80
in a specific country 3 Lone operation 10.50
Costs of conducting business in 15 out of 21 0.07 Total weight of foreign market entry mode 100.00
a specific country factors
Foreign market entry modes 3 out of 3 0.07

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Fig. 3. Tasks involved in external readiness test

Table 4. Threats Posed by International Markets

External Readiness Variable Definition
After it has been established that a company’s strengths allow it to Inflation and currency Relatively high or sudden increase in
successfully operate in international markets 共Fig. 2兲 共i.e., after it fluctuation inflation rate.
passes the internal readiness test兲, a company’s external readiness Interest rate increase Relatively high or unstable cost of
for expansion into international markets is tested 共Fig. 3兲. In this capital.
test, the threats faced by companies operating in foreign countries Shortage of financial Lack of ability to balance financial
and the opportunities that present themselves in these countries resources resources against construction needs.
are assessed. The potential threats and opportunities relative to Bribery in the host Ethical problems that effect the project.
international construction were determined after an extensive lit- country
erature review. These threats and opportunities along with their Foreign competitors in the Competition with different foreign
definitions are presented in Tables 4 and 5, respectively, and are host country affiliations.
not country specific. A detailed discussion of these factors can be Cultural differences Difficulty in relating to the business
found in 共Gunhan and Arditi 2005兲. The top part of Fig. 3 shows practices driven by the culture of the
the tasks performed in developing the external readiness test. A host country.
two-round Delphi process was used to collect the differences in Loss of key employees Loss of experienced and valued
employees.
importance between pairs of threats and between pairs of oppor-

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 Table 5. Opportunities Presented by International Markets
Variable
Technological
advancement
Globalization and
openness of markets
Availability of new
service areas
Increased long-term
profitability
Privatization programs in
emerging
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Definition
Using new technologies to enhance
competitive advantage.
Globalization leading to new business
opportunities.
New types of construction markets.
The effects of diverse markets on
profitability in the long run.
Privatization that creates new business
opportunities.
standard deviations were in the expected direction, such that con-
vergence occurred between the two rounds in 17 pairwise com-
parisons out of 21 for benefit factors and 15 out of 21 pairwise
comparisons for cost factors 共Table 2兲. The median values ob-
tained in the second round were plugged into the EXPERT
CHOICE program. An overall consistency ratio of 0.02 was ob-
tained for benefits and 0.07 for costs, both below the 0.10 require-
ment for logical consistency 共Table 2兲. The relative weights 共WBi
and WC j兲 assigned by the program to each factor are presented in
Table 3.
The bottom part of Fig. 4 shows how the country specific
analysis is conducted by a user. In this step, the user is a team

economies composed of a company executive and a country expert. The

Beneficiary international New opportunities created by
agreements international agreements.
Maintain shareholder’s Long-term profitability that results in
return maximization of shareholder return.
tunities. Convergence occurred between the two rounds in 20
pairwise comparisons out of 21 共Table 2兲 for both threat and
opportunity factors.
The median values obtained from pairwise comparisons of
threats and opportunities were plugged into EXPERT CHOICE
separately. Overall consistency ratios of 0.09 and 0.03 were ob-
tained for threats and opportunities, respectively, which indicates
that the respondents’ judgments are logically consistent 共Table 2兲.
Therefore, the relative weights 共WTi and WOi兲 assigned by the
program to each factor were used in the subsequent steps of the
model. They are presented in Table 3.
The bottom part of Fig. 3 shows how the external readiness
test is conducted by an executive of a company considering ex-
pansion into international markets. The executive uses a 1–5 Lik-
ert scale to evaluate how the company would handle the threats
associated with international construction 共RTi兲 and what the ex-
pectations of the company would be relative to the opportunities
offered by international business 共RO j兲. None of these factors are
country specific since the executives who are taking the test have
probably not been active in international construction; indeed,
they are trying to see if their company qualifies for expansion into
international markets. These ratings are then multiplied by the
respective relative weights 共WTi and WO j兲 obtained during the
model development process. The sum of the WRs of the threats is
compared against the sum of the WRs of the opportunities
7 7
兺
i=1
共RT ⫻ WT 兲 艋 ? 兺 共RO ⫻ WO 兲
i i
j=1
j j
共4兲
If the difference is in favor of opportunities, the company
qualifies in the external readiness test. A benefit/cost analysis is
conducted next to explore the feasibility of expansion into a spe-
cific country.
Country Specific Analysis
The top part of Fig. 4 shows the tasks performed in developing
the country specific analysis. The potential benefits and costs rela-
tive to expansion into a specific country and their definitions are
presented in Tables 6 and 7, respectively. A two-round Delphi
Process was used to collect the differences in importance between
pairs of benefits and pairs of costs. The mean standard deviations
of benefits and costs associated with international construction
were computed for each round. Most of the differences in the
“country expert” is an individual who is familiar with the special
conditions of the country in question, such as a person affiliated
with the country’s consular corps or trade mission, a consultant
hired from the country in question, or an employee of the com-
pany who has been involved in projects in that country in the past.
The team rates each benefit and cost factor by using a 1–5 Likert
scale. These ratings 共RBi and RC j兲 are multiplied by the respective
relative weights 共WBi and WC j兲 obtained during the model devel-
opment process. The cutoff point for the benefit cost ratio is taken
as 1
兺i=1 共RB ⫻ WB 兲
7
i i
艌 ?1 共5兲
兺 j=1 共RC ⫻ WC 兲
7
j j
If the sum of the weighted benefits exceeds the sum of the
weighted costs 共i.e., if B / C 艌 1兲, then the company in question is
qualified for international expansion into that specific country.
The next step is to select the appropriate entry mode.
Entry Mode Selection
The top part of Fig. 5 shows the tasks performed in developing
the part of the model that deals with the selection of the entry
mode. The differences in importance between pairs of entry
modes were collected by means of a two-round Delphi process.
Entry mode alternatives relative to international construction con-
sist of lone operation, joint venture operation, and operation
through a subsidiary. There may of course be variations of these
entry modes 共e.g., varying degrees of minority/majority participa-
tions in joint ventures, wholly or partially owned subsidiaries, a
client with a foreign project engaging a contractor from their
home country兲, but these were not investigated. The definitions of
the three entry modes considered in the model are presented in
Table 8. All the differences between the mean standard deviations
computed for each round were in. the expected direction 共Table
2兲. The median values obtained in the second round were plugged
into EXPERT CHOICE and an overall consistency ratio of 0.07
was obtained, indicating logically consistent judgments on the
part of the respondents in the two rounds 共Table 2兲. The relative
weights 共WEi兲 assigned by the program to each factor are pre-
sented in Table 3.
The bottom part of Fig. 5 shows how the entry mode selection
is conducted by a team composed of a company executive and a
country expert. The team rates each entry mode by using a 1–5
Likert scale. These ratings 共REi兲 are then multiplied with the re-
spective relative weights 共WEi兲 obtained during the model devel-
opment process. The entry mode that receives the largest
weighted rating is selected as the foreign market entry mode for
the specific country.

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Fig. 4. Tasks involved in the calculation of the benefit/cost ratio in a specific country

Testing of the Model

The Internation Expansion Decision Model was tested by using
an international construction company which already has a
proven track record in international markets. This company was
listed in the ENR Top 225 International Constractors 共2002兲 and
Table 6. Benefits of Undertaking Construction Work in a Foreign was over a hundred years old. At the time of the test, it was one
Country of the largest dredging contractors in the United States and one of
Variable Definition the largest in the world. The company’s versatile fleet of dredges,
drillboats, and attendant plant was valued in excess of $700 mil-
Prestige Recognition in the international arena.
lion and constituted one of the largest dredging fleets in the
Business expansion Creation of new markets for business. United States. International expansion started in the 1970s as the
Geographical expansion Diversification that reduces risks. company took on projects in the Middle East, Africa, and Central,
Tapping new and booming Taking advantage of the profitable and South America. The company was not among the companies
markets markets. that participated in the surveys and the development the model.
Protecting the company Expanding the business’ horizons The international business development manager of the company
against cycles through developing markets. agreed to use the model for testing purposes.
Competitive use of Effective use of resources. The WR of company strengths in the Internal Readiness Test
resources 共WRs = 392兲 was found to be larger than the threshold value
Competitive advantage Results from specialist expertise or 共Ts = 382兲. This result showed that the company was strong
technology lead.
enough to attempt international work.

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 Table 7. Costs Associated with Undertaking Construction in a Foreign
Country
Variable Definition
Economic risks Unstable economic conditions in the
host country that can create losses for
foreign companies.
Political risks Unstable governments in the host
country that can harm the operations of
foreign companies.
Financial risks Probability of losing money.
Operational obstacles— Policies of the host countries that can
Entry barriers make it difficult for foreign companies
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to penetrate the market.
Taxation Taxation system of host country that
may be disadvantageous to foreign
companies.
Legal environment of host Business and contract laws in host
country country that can be disadvantageous to
foreign companies.
Security risks Unsafe environment in the host country
that can harm the operations of foreign
companies.
Fig. 5. Tasks involved in the calculation of the International Expansion Mode weights
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J. Constr. Eng. Manage. 2005.131:928-937.
Table 8. International Expansion Modes
Variable Definition
Joint venture Establishing a firm that is jointly owned by
two or more otherwise independent firms, at
least one of which may be based in the foreign
country in question.
Wholly owned Acquisition of an existing firm in the foreign
subsidiary country in question.
Lone operation Contractor agrees to handle every detail of the
project without any assistance from another
company.
The company was then tested for external readiness. In this
instance, the weighted rating of opportunities 共WRO = 373兲 was
only slightly larger than the weighted rating of threats
共WRT = 372兲, but enough to pass the External Readiness Test. This
result showed that the company was ready to handle external
threats by taking advantage of the opportunities available in the
global market place.
The international business development manager who pro-
vided data for the test suggested using Mexico in the “country
specific analysis” as the company had, and continues to have, a
 successful operation in Mexico. Because of his prior involvement
in many projects carried out in Mexico, the executive doubled up
as the country expert and answered all questions. The weighted
benefit rating 共WRB = 438兲 was found to be much larger than the
weighted cost rating 共WRC = 318兲 which indicated that it would be
quite lucrative for this company to conduct construction business
in Mexico.
Finally, in the last step, the foreign market entry mode was
selected. The selected alternative with the largest WR was
“wholly owned subsidiary.” This result also matched reality as
this company had indeed a subsidiary in Mexico through which
the company conducted its construction activities.
All the results in the consecutive tests of the model 共i.e., the
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internal readiness test, the external readiness test, the country spe-
cific analysis, and the selection of the entry mode兲 are in full
accordance with the real-life experience of the tested company.
This test does not constitute a universal validation of the model
but shows clearly that the model functioned well in one typical
case where the conditions were well known.
Conclusion
The study presented in this paper surveyed the executives of con-
struction companies that have been active in international markets
for many years and extracted—through a combination of AHP/
Delphi methods—the necessary information to generate the rela-
tive weights of the various company strengths, threats, and oppor-
tunities associated with international construction, benefits and
costs relative to individual countries, and international expansion
modes. The combined use of AHP and Delphi is an original ap-
proach that was successfully explored in this study. Indeed, the
data provided by the Delphi study to the AHP process yielded
results that are consistent, as measured by the consistency ratios
that were always below the threshold of 0.10 specified by Saaty
共1999兲.
A company that is considering international expansion first
rates itself relative to its strengths 共Table 1兲 associated with inter-
national construction. These ratings are multiplied with the re-
spective relative weights provided by the model. The sum of the
WRs is compared with a threshold value also provided by the
model. A company that scores higher than the threshold value
passes the internal readiness test.
The company then rates the threats and opportunities per-
ceived in international construction. These ratings are multiplied
with their respective relative weights provided by the model. If
the sum of the weighted opportunity ratings exceeds the sum of
the weighted threat ratings, then the company passes the external
readiness test, too.
The next step is to see if the company is qualified for operation
in a specific country. A team composed of an executive and a
country expert rate the benefits and costs associated with conduct-
ing business in the particular country in question. These ratings
are multiplied with the respective relative weights provided by the
model. If the weighted benefit/cost ratio is greater than or equal to
1, then the company is expected to be successful in that particular
country.
Using the proposed model, it should be possible to test con-
struction companies for international business expansion. The
study also highlights the factors that are of importance in success-
ful international construction. Based on the information provided
by this study, company executives should be able to identify, ana-
lyze, and if necessary improve their company’s strengths and
936 / JOURNAL OF CONSTRUCTION ENGINEERING AND MANAGEMENT © ASCE / AUGUST 2005
J. Constr. Eng. Manage. 2005.131:928-937.
eliminate their weaknesses relative to international expansion.
They should also be able to appreciate better the threats and op-
portunities presented in international construction, and the ben-
efits and costs associated with conducting business in specific
countries. Especially at times when domestic markets are down
and construction companies are forced to look to international
markets for survival, it is important that a model exists that allows
executives of these companies to have an objective and thorough
understanding of the factors involved.
Finally, an entry mode needs to be selected. Again, the team
composed of the executive and the country expert rate the desir-
ability of the entry modes in that particular country. These ratings
are then multiplied with the respective relative weights provided
by the model. The entry mode that receives the highest WR is
selected.
Executives of many construction companies have to consider
operating overseas at some time or another. This study is of rel-
evance to practitioners because these executives need a tool that
allows them to assess the readiness of their company vis-à-vis
expansion to international markets. The study is of relevance to
researchers too in that it combines Delphi with AHP in an inno-
vative way. This combination may become the norm in future
studies as it has proved to significantly improve the quality of the
data plugged into the AHP system, hence consistently achieving
consistency ratios well below the maximum 10% limit.
Notation
The following symbols are used in this paper:
RBi ⫽ user’s rating of benefit 共i兲 of doing business in a
specific country;
RC j ⫽ user’s rating of cost 共j兲 of doing business in a
specific country;
RO j ⫽ user’s rating of opportunity 共j兲 in international
construction;
RSi ⫽ user’s rating of company strength 共i兲 in international
construction;
RTi ⫽ user’s rating of threat 共i兲 in international construction;
TS ⫽ threshold value for company strengths;
WBi ⫽ relative weights of benefit 共i兲 factors;
WC j ⫽ relative weights of cost 共j兲 factors;
WO j ⫽ relative weights of opportunity 共i兲 factors;
WSi ⫽ relative weights of company strength 共i兲 factors;
WTi ⫽ relative weights of threat 共j兲 factors; and
WRS ⫽ sum of weighted company strength ratings.
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