The increased need to have a well-structured infrastructure has triggered different companies to eye the construction industry. The District Contracting Group operates in this highly competitive environment the goal of the company is to increase efficiency in putting up structures for the government and institutions. Also, the company assists the state in the preparation of procurement manuals by providing the appropriate date and training the procurement personnel. The management focuses on exceeding the expectations of the clients to improve their loyalty. Apart from investing in highly qualified staff, the organization has adopted technology to provide highly efficient services. The standards set by the company are not only meant to fulfill the clients’ needs but also to meet the organizational objectives.
Overview of the Industry in which District Constructing Group
The construction industry in the United States is the second largest in the world with a value of approximately $900 billion (Karakhan & Gambatese, 2017). The most intense architectural and construction activities to replace in the cities whereby organizations are ina constant process of renovating and upgrading their buildings to the growing need of the years. Also, some of the biggest construction firms in the world such as Bechtel are based in the United States. This is promising to the emerging firms because previously, the high ranking firms were dominated by the Chinese firms.
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The construction industry in the United States is viewed is the key indicator of the growth of the national economy. The massive investment in the construction industry is also a source of employment to thousands of skilled and non-skilled citizens and immigrants. After the 2008 recession, the industry has recorded a significant annual growth of 9%, and it is expected to growth by at least 20% in 2020(Karakhan & Gambatese, 2017). The growth has been attributed to the zero-rated interest in the companies by the Federal Reserve Bank this was affected to meet the need soft Millennials who form the bulk of potential home buyers. Although the competition is high, established companies such as the District Contracting group have a competitive edge since they have regular clients and the quality of the services rendered always attract new customers
Applying Porter’s Five Model can help in understanding the dynamics of the environment in which District Construction Group operates. First, the bargaining power of the suppliers is high. The rationale for this is that most of them find it challenging to make profits since they spend lengthy times and bureaucracies while obtaining the necessary paperwork (Karakhan & Gambatese, 2017). This raises the prices of the materials. Since workers are also supplied in the United States, the high number of employees seeking both skilled and non-skilled vacancies makes it easy for the companies to obtain labor. Secondly, the bargaining power of the buyers also forms a core in the construction industry in the United States. Analysts describe it as vulnerable to fluctuation. Currently, the bargaining power of the buyers is high. Statistics also indicate that there are more high-end condominiums than the number of buyers (Franz & Leicht, 2016). This gives the already established companies an opportunity to make profits. Also, the boom of the Millennials who are looking for houses to buy or mortgage.
The threat of substitutes in the industry is low. The rationale for this that the customers do not have an option while looking for a place to settle. They can only choose between the houses offered by different companies. They can also choose between the different cities. For instance, some may opt to settle in New York while others chose to live in Brooklyn (Franz & Leicht, 2016). There is also another substitute involving renting and buying. The economic standard of the citizens dictates the plan that they choose. While most of the youthful workers may rent apartments, those in the middles age are likely to look for mortgage plans or buy already built houses altogether.
The threat of new entrants is also an important consideration in the construction industry. The threat is relatively low since there is a high capital requirement for newly established firms. It is also noteworthy that the new firms find it hard to secure new contracts, especially from the government institutions. This discourages investors. Popular construction companies such as the District Construction Group, therefore, have a high chance of obtaining contracts. The competitive rivalry is high. The big companies scramble for the high-value contracts offered by the government and other private institutions (Franz & Leicht, 2016).
Drawing inference from Porter’s model, it is evident that offering high-quality services is imperative in remaining relevant in the construction industry in the United States. This can also affect the success of the company. Particular, the highly effective and competitive multinational companies that have infiltrated the American economy have set the standard so high for the local companies (Boos, 2017). Since the company has not diversified in venturing into the residential apartments, it faces stiff competition from the diverse companies that engage in both real estate and institutional markets.
PESTEL Analysis
The strategic analysis of the industry in which the company operates can also help in identifying the various challenges and opportunities that exist for the Construction District Group. The political environment in a way provides a favorable environment in the United States. The government is determined to increase the public expenditure on the country’s infrastructure. President Trump made clear his intention of revitalizing the infrastructure by building and renovating bridges, roads and other public facilities (Franz & Leicht, 2016). The District Construction Group can take up the opportunity and provide services to the government on different projects across the country. However, this is likely to attract multi-national companies with branches in the United States. It is noteworthy that most of the developed countries have cut their budgeting spending on infrastructure (Franz & Leicht, 2016). Therefore, a good number of them can turn to the United States, and this is likely to heighten the competition. The local companies may, however, benefit from President Trump’s notion that the institutions awarding contracts should prioritize the American companies. Transparency has also been cited as a major political implication for the construction companies. The perceived corruption perpetrated by companies handling high-value projects has been a source of criticism from the public, and this is likely to affect the securing of projects by the suspected companies.
The economic status of the clients affects the number of projects that can be carried out during any specific time. Most of the institutions have not fully recovered from the recession, and they are cautious in prioritizing projects. This has reduced the number of available projects that the organization can work on (Franz & Leicht, 2016). Additionally, the government is expected to levy higher taxes to meet the infrastructural needs in the country, and this can affect the company’s profits.
Various social factors also impact the District Construction Group. First, the world population living in the urban areas is increasing. Analysts indicate that by 2050, more than 70% of the people in the United States will be living in urban centers (Karakhan & Gambatese, 2017). This will increase the need for bigger institutions, public facilities, and residential areas. Also, the number of students enrolling for colleges has been increasing gradually due to additional government subsidies in education. There is, therefore, a projected increased need for bigger and modernized institutions. The strategic plan set by the District Constructing Group revolves around meeting the needs of the increasing population (District Constructing Group, 2016). An early identification of the institution and companies that are likely to expand their infrastructure can be an instrumental tool that the management can exploit to market its services and secure high-value projects.
Technology also has direct effects on the operations of the construction firms. The rapidly changing use of machines and applications has been critical in reducing the cost of production. To meet the needs of the savvy clients, the company has to keep pace with their technological needs. The District Constructing Group has a progressive information technology plan that brings together a group of technicians to oversee its implementation and adaptation. The team facilitates a speedy processing and organization of data (District Constructing Group, 2016). The different departments in the organization are also networked using modern plans. Also, as a company providing services to the government and other institutions, data security is a primary concern and an organizational priority. The highly trained IT team ensures data safety by using high-end applications and software. The compliance to the technological needs is expected to propel the company’s objectives since its operations fit in a highly competitive environment (District Constructing Group, 2016). Also, by using relevant and user-friendly applications, the company gains the trust of government agencies and institutions that seek its services.
The global environmental concerns also have an impact on the construction industry. The Environmental Protection Authority requires companies to engage in processes that result in less pollution. Particularly, the use of recycled materials while constructing offices, halls, and houses is encouraged as a method to conserve the environment. Since a big number of individuals are moving to the urban centers, the environmental advocacy groups are championing for greener cities (Karakhan & Gambatese, 2017).This will affect the architectural plans and the type of materials used by the companies. The District Construction Organization will have to adjust its plans and conform to the recommendation of the environmental bodies.
There are various legal implications that can affect the strategic plan of the District Organizational Group. The Affordable Housing Act, for instance, requires the companies putting up residential houses to provide low-costunits, particularly for the youthful workers and students. Also, the government supported housing initiatives have specific requirements aimed at helping the first-time buyers to acquire affordable units. This is likely to affect the operations of the company since it provides services to the government and state-owned institutions.
Threats and Opportunities Analysis
In the industry, various threats have the capacity of affecting the strategic planning if not addressed by the management. First, due to government downsizing, the company has been forced to outsource the work. This is done to control overhead costs and scale down the cost of labor. Also, the lengthy bureaucracies introduced by the government have led to lengthy procurement procedures, and this increases the cost of administrative tasks. Secondly, the organization faces a threat from multinational companies that are eying the American construction industry. Since most of the rivals offer diverse services for the state, institutions and private developers, the organization’s unilateral approach is a major disadvantage.
There are however several opportunities that can be imperative in countering the intensity of the threats. First, the number of the institutions is expected to go up to accommodate the increasing number of users (Karakhan & Gambatese, 2017).This provides an opportunity for the organization to render its services. Secondly, the increasing number of individuals who are in need of housing provides an opportunity for diversification. The management should use the opening to develop its capacity to offer services to private developers and housing schemes that are not necessarily supported by the government. This can help in remaining relevant amid the high competition.
The organization’s current strategy can meet the market needs and still make it remain competitive. The management is working towards modernizing its services to meet the changing needs of clients and environmental requirements. The current market needs revolve around offering user-friendly services and at the same time comply with the legal and environmental requirements (District Contracting Group, 2016). The increased expenditure on public infrastructure puts the company on a competitive edge of getting contracts for the state and the federal government. Also, the expansion of institutions to accommodate the high number of users increases the demand for the organization’s services. These objectives can be achieved through the strengthened internal human resource capacity.
Conclusively, the District Construction Group can use its platform to take advantage of the increased demand for public facilities. Through renovation and putting up new facilities, the company can inflate its profits and gain a competitive edge against its rivals. The management has invested in human resource development and technology to meet the dynamic needs of clients. Additionally, the political environment favors the company since it is likely to be given priority in state projects byue of being a trusted American organization. However, there is a need to diversify the services for the company to retain its relevance. The management should consider expanding the services to private developers and companies instead of overlying on institutional projects.
References
Boos, A. (2017). Project management contractor's roles and responsibilities . Wmsym.org . Retrieved 5 March 2017, from http://www.wmsym.org/archives/1998/html/sess28/28-02/28-02.htm
District Contraction Group. (2016). General Contracting . Retrieved from http://districtcontracting.com/services
District Contraction Group. (2016). Our services . Retrieved from http://districtcontracting.com/services
Franz, B. W., & Leicht, R. M. (2016). An alternative classification of project delivery methods used in the United States building construction industry. Construction Management and Economics , 34 (3), 160-173.
Karakhan, A. A., & Gambatese, J. A. (2017). Identification, Quantification, and Classification of Potential Safety Risk for Sustainable Construction in the United States. Journal of Construction Engineering and Management , 04017018.
