Indian Institute of Management, Indore

Integrated Programme in Management

Aspects Of International Business Management
Individual Project

Arabian Construction Group

Submitted To
Gangar Mitesh Laxmixhand
Submitted By
Avanish Kushwaha (2018IPM024)
 INTRODUCTION
Heavy industry is characterised by large and heavy goods, large and heavy equipment and
facilities (such as heavy equipment, enormous machine tools, massive structures, and large-scale
infrastructure), and complex or multiple processes. As a result of these variables, heavy industry
has a more significant capital intensity than light industry, and it is also more cyclical in terms of
investment and employment. These industries are essential for the economic development of a
country as they produce goods that are considered crucial for nation-building. Along with the
importance, these industries are also tainted with multiple precarious downsides. Health concerns
and environment preservation are on the top of the list.

Throughout the industrial age, construction enterprises and their upstream manufacturing
businesses have been the busk of heavy industries. Construction businesses are a significant
aspect of development due to the high level of contact between them and numerous other heavy
sectors.

Arabian Construction Company (ACC), headquartered in Abu Dhabi, is a premium and one of
the top construction companies in the Middle East and India, with branches worldwide. ACC
Group has established itself as one of the leading construction companies in the Middle East
region, with a portfolio that includes some of the most iconic and sophisticated construction
masterpieces in the Middle East and India. ACC is well known for various projects such as
Ethiad Towers, Gate Towers, and World One, which are still regarded as architectural marvels by
the architectural community. The ACC group's design ingenuity and punctuality towards other
business dimensions have always acted to add more and more feathers to its cap of
achievements.

The company has more than 50 years of experience in the heavy construction industry with
ongoing operations in more than 7 countries. It employs more than 20000 workers from across
the globe. With a turnover of more than one billion dollars per annum, the option of further
expansion and capturing new markets to put more displayed creativity and design ingenuity will
support companies’ legacy and its financial motives as well.

This report attempts to analyze various dimensions of Arabian Construction Company’s possible
entry into Japan.
 PASTEL ANALYSIS

PESTEL analysis is a framework or methodology that marketers use to study and track
macro-environmental (external marketing environment) aspects that affect an organisation,
company, or industry. It investigates the external environment's political, economic, social,
technological, environmental, and legal elements.

POLITICAL
Government policies, leadership, and change; foreign trade policies, internal political challenges
and trends, tax policy and regulatory and deregulation tendencies are all political influences.
Japan is a constitutional monarchy with very linkage to post world war pacifism. The country is
highly focused on infrastructural development with skyscrapers being built every day in the
highly populated cities of Tokyo. There exists a lucrative political environment for the ACC
group to enter and fulfil the constructional requirement of the nation.

The political sphere of the country is highly dominated by various trading partners in the west
with the USA being on the top. As ACC is a company from the middle east and Japan’s various
trading and security partners are from the west, the probability of political intervention is high.
Construction is a financially cumbersome task and the political pressure from various indigenous
groups might hinder the cash flow towards the ACC group.

ECONOMICAL
Current and future economic growth; inflation and interest rates, job growth and unemployment;
labour costs, the impact of globalisation, consumer and business disposable income and likely
changes in the economic environment are all economic issues to consider. ACC being a
construction company would target consumers to buy flats and condos in the buildings. With
heavy investments and machinery costs involved, the per capita GDP becomes a significant
indicator for ACC’s growth. Japan’s per capita GDP is above $400000, making it a place for
further investments in construction. The future economic growth prospects of Japan are very
optimistic as the country has had a growth rate of nearly 2.2% even after stagnation in growth in
various sectors.
With the growing population in cities, the need for skyscrapers has increased significantly but the
inflation rates and interest rate on capital have taken a negative turn in the past years which is a
risk for the ACC group in Japan.

SOCIAL
Demographics (age, gender, race, and family size); consumer attitudes, opinions, and buying
patterns; population growth rate and employment patterns; socio-cultural shifts; ethnic and
religious trends; and living standards are all examples of social elements. Japan is a country with
deep-rooted social and traditional values. Expansion in Japan needs a touch with Japanese
culture.

TECHNOLOGICAL

New ways of creating goods and services, new ways of distributing goods and services, and new
ways of connecting with target markets are all affected by technological considerations. ACC has
access to the best of technology as far as construction is concerned. Japan focuses on efficiency
and the ACC group will assimilate well with this idea.

ENVIRONMENTAL

Due to the rising scarcity of raw materials, pollution targets, conducting business in an ethical
and sustainable manner, and carbon footprint standards, environmental factors are crucial. Japan
lays heavy emphasis on environmental conservation. The ACC group will have to abide by it
which will cost more. Construction involves pollution in various degrees ranging from soil
pollution and air.

LEGAL

Health and safety, equal opportunity, advertising standards, consumer rights and regulations,
product labelling, and product safety are all legal considerations. Japanese legal system has great
emphasis on the conservation of human rights and the ACC group’s practices in the past have
been shady in this aspect.