Competitive Advantage of a Construction Company

Competitive Advantage of a Construction Company

Part B

Assume that you manage a company ABC Construction which your company has the scale similar to YTL By using 5 forces model and any other analysis tools access your competitive advantage in the property development industry

For this question assumptions are made to ABC Construction which has similar scale to YTL However to increase the competitiveness advantage of the company I would also like to include other assumptions to ABC Construction

The assumption will be made based on the following
ABC Construction have other subsidiaries companies such as Cement Company and hotels
About the same historical years involving in the construction industry
Has been involved in overseas property development projects
Listed company in Bursa Malaysia and Tokyo Stock Exchange
Involve in the SoHo property development

For property development industry the threat of new entrants to ABC Construction is low because the barriers to entry property industry is high As it required huge capital to enter this industry to purchase land machineries tools plants other business and marketing activities At this point since ABC construction has about 60 years of experience in these industry the threat of new entrants is relatively a minor problem which does not cause any competitive disadvantages to the company The working capital for the company is already strong enough and very liquidity

Benefit from economies of scale in financial economies and economies of scope as a big construction player with long history in the industry ABC construction has increment efficiency more trustworthy and can take these advantages by borrowing funds from bank at a lower interest rates compared to the other competitors Lower interest rates eventually provides bigger cash flow and generate greater profit return This allow capital expansion such as can build more units of houses or properties with less input costs compare to smaller scale competitors which gets high interest rates in borrowing

Apart from that ABC construction also able to provide product differentiation Since the company has been involved in different types of businesses the company able to apply its unique skills and resources to achieve better utilization of land human capitals more appealing design in development and innovation which then generate higher revenues and return in profit Different design theme and concepts can be applied to produce differentiation such as branded luxury residential 8 ConlayKSK LAND private gates park concepts Sentul Park Sentul Raya Sdn Bhd and natural elements to provide therapeutic lifestyles Ecoworld Eco World Development Sdn Bhd with its strong working capital ABC Construction able to spend a large sum of money in creating something new to attract their potential buyers ABC construction able to convenience its potential customer by spending a great deal of money on advertising in the newspaper radio websites and television programmes For example ECOWORLD has successful transform their company to a brand which attract customers to value their product and thus new entrance need more resource to overcome loyalties and leads to less profit or even losses

With its globally population and reputation ABC Construction has an addition competitive advantages The company can launch and sold their properties through distribution network either locally or internationally The distribution channel for ABC construction will be high as it does not only involve actively in Malaysia its subsidiaries company also involve actively in oversea projects in Singapore Indonesia England Australia and China This make the company has larger distribution channel compared to other competitors

In terms of bargaining power of suppliers the main materials for construction are steel bars formworks concrete The suppliers are not concentrated or differentiated On the other hand ABC Construction will have greater advantages compared to its competitors because the company has it

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