CONSTRUCTION INDUSTRY

Construction Industry



Table of Contents

INTRODUCTION3

BALFOUR BEATTY PLC3

Company Structure3

PEST ANALYSIS OF BALFOUR BEATTY PLC4

Political Factors4

Economic Factors5

Social Factors6

Technological Factors7

EMERGING TRENDS IN BUYER'S BEHAVIOR AND INFLUENCE ON DEMAND IN GERMAN CONSTRUCTION INDUSTRY8

SWOT ANALYSIS OF BALFOUR BEATTY PLC15

Strengths15

Leading market position15

Robust revenue and profit growth16

Weaknesses17

“Breach of contract” issues17

Opportunities18

New projects in international markets18

Major service contracts in domestic markets19

Threats19

Global economic slowdown19

Intense competition20

MARKET ENTRY METHOD21

Joint Venture: UK company with German Comapny21

REFERENCES25

Construction Industry

Introduction

This report analyses the German Construction industry for a UK based construction company Balfour Beatty PLC. The construction industry is one of the most important sectors of the German economy. Despite the difficult position of the industry at present, well over half of all investments are still made in this sector and approximately 2 million people are employed in the construction industry proper and finishing trades. The sector is important economically and politically because it has close links with a number of other sectors upstream and downstream. (Slaughter 2008 pp. 226-231)

Balfour Beatty PLC

Company Structure

Balfour Beatty PLC is a UK-owned public limited company. Until May 2000, Balfour Beatty traded under the name of BICC PLC. The company operates internationally and has four key business areas: Building, Building Management and Services; Civil and Specialist Engineering and Services; Rail Engineering and Services; and Investments and Developments. In each of its four divisions, the company is able to work across the supply chain.

Pest Analysis of Balfour Beatty PLC

Political Factors

The availability of an adequate supply of housing is considered by many consumers to be a matter in which the Government should play a positive role (whether for public- or private-sector housing). As far as private-sector housing is concerned, this is not necessarily true, although the provision of satisfactory housing is generally considered to be an important political issue.

Private Finance Initiative (PFI) and Public Private Partnership (PPP) projects are key elements in the financing, building and operation of many construction projects, particularly in the health and education sectors. As a result of government involvement in these schemes, they inevitably have political implications, such as project selection, choice of partners and financial overruns.

The UK construction industry is very large in terms of turnover and the number of people employed, and has a high profile. Politically, the Government cannot afford not to encourage and be empathetic towards one of the country's largest sectors.

Affordable housing is an important social issue. House prices are now so high that many prospective house buyers cannot afford to enter the property market. To help in this direction, the Government is encouraging affordable-housing schemes.

Regulations covering planning permission are causing delays in the construction of homes, as well as other buildings. As a result, there can be extensive discussions and disputes that are often interpreted as excessive political red tape.

 

Economic Factors

With a turnover of more than £100bn, the construction industry has a high economic profile, and is one of the UK's largest economic sectors.

Growth in gross domestic product (GDP), interest rates and inflation all have a bearing on the wellbeing of the UK construction ...