Dissertation Writing Help in Strategic Analysis Topic of Construction and
Engineering Industry India-
Project Report on Indian Construction and
Engineering Industry- Strategic Analysis
The
construction and engineering industry is characterized by large incumbents
operating alongside smaller companies. Rivalry is eased somewhat by companies
diversifying operations into other sectors. There are a small numbers of buyers
in this industry, and typically large in size. Similarly suppliers have a great
deal of power over market players as their raw materials are essential for
players’ businesses. However suppliers have also suffered the effects of the
global economic crisis, seeing the prices of many raw materials rise. There are
few, if any, substitutes available in
this industry.
Buyers
in this industry tend to be large and few in number. Typically the main buyers
are government agencies or large private-sector customers, usually corporate
rather than individuals. Generally, in this industry, customers invite market
players to tender for contracts which are on the customers’ terms. This means
the buyer is in a more powerful position as they specifically define the
parameters of the project. However, in some circumstances, market players can
influence customer requests.
In
contrast to most other countries, the construction and engineering industry in
India did not fall into decline during the global recession and retains
positive growth. However in July 2012, the Indian government's Planning
Commission announced it would not be able to achieve its $1 trillion investment
target in the infrastructure sector during its 12th Plan (running from 2012-17)
in view of lower economic growth prospects.
Buyers
are influenced by economic factors such as the long term maintenance and
proposed efficiency of the project, meaning that contracts are not always won
on price. Unlike private-sector buyers there is little brand loyalty, with personal
taste making a negligible impact upon decision making. In addition to this
there are no switching costs which coupled with the strong price sensitivity of
the industry that is imposed by typical tendering processes, serve to strengthen
buyer power somewhat. On the other hand, buyers are often unable and unlikely
to integrate backwards into project management themselves. Furthermore, the
buyer will have incurred before inviting contractors to submit tenders, for
example in raising funds, consulting with stakeholders and defining
requirements. Thus the project is likely to be of significant importance to the
buyer. Buyer power in this sense is reduced. Overall, buyer power in the Indian
industry is assessed as moderate.
There
are two forms of supplier to this industry. Firstly the distributors of
materials and components, and secondly subcontractors who provide specialized
services needed for the completion of projects, for example bricklaying or
electrical installations. The manufacture of building materials is highly
consolidated with players such as Holcim and Cemex dominating most markets. The
fact that these materials are essential for market players moderately augments
supplier power. However, these materials are largely undifferentiated, meaning
suppliers will have to compete heavily on price to assure contracts.
Furthermore, the surge in commodities demand from developing markets has seen
rises in the price of raw materials, intensifying competition amongst
suppliers. There are typically larger numbers of sub-contractors with the
necessary skills to complete projects, which puts them in a weaker position.
Supplier power in this industry is assessed as moderate overall.
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