Competing in the Global Market

They are (1) the ultimate customer, who use and consume the final products and (2) direct E/C Clients. The needs and expectations of ultimate customers can be grouped in five basic areas.

The research created a hierarchy of future needs that provides an overview of the many forces that drive global strategies. (RS30-1, p. 5)

E/C firms will need to become lean and flexible in providing the diverse services required for concept development, innovation, design, and construction. In order to provide these services, E/C firms will obtain supplemental services through a network of specialty firms working as partners.

Examples of these expectations include the following, while the complete discussion may be found in the research. (RS30-1, p. 9)

• Share the client’s vision of the future.
• Understand the client’s products, processes, and markets.
• Contribute new technologies that add value to the client’s products and processes and support the client’s environmental objectives.

The changing nature of the engineering and construction services due to reallocation of many functions done by client in-house to E/C firm will allow the E/C firm to shape project concepts to a much greater degree in marketing, organization, and project execution areas. (RS30-1, p. 13)

 There are many actions that E/C firms can explore individually to be responsive to the needs of international clients. These include:

1. Identify compatible values and philosophy
2. Sustain long term relationship
3. Become a partner
4. Prepare to provide additional services
5. Develop a compatible quality philosophy
6. Establish global partners and alliances
7. Develop environmental responsiveness
8. Develop new technologies
9. Utilize information technology
10. Educate to work in a new client-contractor environment

The research provides a summary of many possible responses to satisfy the customer needs, grouped into the three key areas of the global E/C business: Market, Organization, and Project Execution. (RS30-1, p. 16)

Alliances defined as “the long-term association with a non-affiliated organization, used to further the common interests of the members.” This research suggests that alliances are the best strategy to satisfy the increasingly varied needs of global clients when they exceed a firm’s own capabilities. (RS30-1, p. 21)

The common objective of any alliance is to strengthen the competitiveness of all parties while remaining independent and unique. General guidelines for an alliance include: (RS30-1, p. 26)

1. The alliance produces a comfortable atmosphere built on trust.
2. The purpose for the alliance is clear.
3. Cooperative spirit exists among alliance partners.
4. The risks are identified and affordable.
5. The alliance complements the strengths of each partner.

Key evaluation points that will impact forming and maintaining alliance relationships are listed below. In addition the research details selection criteria, challenges/risks and lessons learned in forming alliances. (RS30-1, p. 27)

Provides input of key characteristics for forming alliances in this competitive, and fragmented region. A few examples are shown here with the details included in the research. (RS30-1, p. 31)

• European firms prefer continuity of personnel to maintain and strengthen the level of trust as opposed to US practice of short-term rotating personnel.
• European firms may be more inclined to form alliances or joint-ventures with several contractors to build relatively small projects as opposed to American construction firms who are used to competing and averse to sharing.

Provides input of key characteristics for forming alliances in this rapidly emerging region. A few examples are shown here with the details included in the research. (RS30-1, p. 33)

• Asian countries have large variety and profound differences in languages, cultures, and customs.
• Fundamental cultural differences between East and West have historically been a barrier to the participation in Asian markets.
• Asian firms use a minimum amount of documentation to define the terms of their alliances.

RS30-1, Implementing an International Construction Alliance

Includes a five-step model for implementing an international construction alliance. (RS 30-1, Appendix A)