Strategic market positioning in the construction industry: Model for evaluating mobility and diversification

In the building industry, current workloads do not guarantee future work. Construction organisations will have to live, and, if necessary, learn to live, with fluctuating demand for its services. When doing so, the successful contractor will recognise that he is in a position to bring about change, in the environment, changes which will result in what Schumpter called 'creative destruction'. In the process, the contractor will forge new markets and new customers. Faced with declining workloads, construction firms have had only three options: 1. accept real declines in output; 2. fight for a bigger share of a declining market; 3. diversify into new markets. The objectives of this study are (1) to investigate the effect of the environment (both internal and external) and complexity of projects on the output of construction organisations when planning a move to a new market; (2) to identify factors that affect the ability of contractors to use diversification as a strategy; and (3) to identify the areas of improvement to meet the requirements of new market/s. Very little is known about markets in the building industry or the possibilities of diversification, and there is a need for methods to assist firms in combining company strength with analyses of potential markets for a company to develop survival V strategies. To do this, the thesis develops several part-models designed to assist construction firms to identify and diversify into new markets. The empirical support is derived from a survey of 108 building companies within Sydney. The data were obtained by face-to-face interviews and telephone interviews on Issues related to organisational structure, resources, techniques, marketing and management strategies. Data analysis by coefficient alpha and ranking methods were carried out to determine the important variables of diversification, mobility and the rest. The results suggest that by strategically matching the firm's resources, environment and its competitors; using the part-models, the mobility of construction firms from one market to another is enhanced.