External and Internal Environment Analysis of Aurecon in Singapore

This report analyses the external and internal environment of Aurecon in Singapore. It includes PESTEL analysis, Porter's five forces, industry life cycle curve, needs of customers, efficiency, expertise, and strategic capabilities.

Running head: BUSINESS MANAGEMENT
Business Management
Name of Student
Name of University
Author Note

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Table of Contents
A. External environment analysis..............................................................................................2
Identifying correct industry....................................................................................................2
PESTEL analysis....................................................................................................................2
Porter's five forces..................................................................................................................3
Industry life cycle curve.........................................................................................................5
Needs of the customers...........................................................................................................6
Efficiency...............................................................................................................................7
Expertise.................................................................................................................................8
B. Internal environment.............................................................................................................9
Strategic capabilities...............................................................................................................9
VIRO....................................................................................................................................10
SWOT...................................................................................................................................11
C. Confrontation matrix...........................................................................................................12
D. Conclusion...........................................................................................................................13
Bibliography.............................................................................................................................14

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A. External environment analysis
Identifying correct industry
Aurecon is an architecture and engineering company that have made plans to design
and elevate skyscrapers. However, based on the analysis of the statistics provided, it can be
said that Auroon does not play major parts in engineering consultancy services in Australia. It
does not provide environmental services and in the country. Some of the major competitors
of the company include ALS Limited, SGS Australia Holdings Pvt Limited and so on
(Aurecongroup.com 2018). Hence, making a move for expansion in a foreign land
particularly in Asia can be a challenging factor for the company. The report highlights the
challenges that Aurecon may face in the markets of Singapore.
PESTEL analysis
Political- According to Navarro-García, Arenas-Gaitán and Rondán-Cataluña (2014),
the political environment of Singapore is not hostile, and the state does not interfere with the
affairs undertaken by the organisations in the country. This can be a huge opportunity for
Aurecon to establish its business.
Economic- The characteristics of the economic condition of Singapore can be made
with its openness and the manner in which the country possess the ability to be a good
financer for organisations. The stable growth of the economy can allow Aurecon to have a
steady growth in the market.
Socio-cultural- The analysis of the socio-cultural factor of Singapore shows that the
country has a good amount of talents and skills in the economy (Lim 2018). It includes
proper understanding and knowledge of the engineering that may help the company to gain
success.

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Technological- This is one of the biggest threats to the company, as in the modern
world technology is an important factor. The need for manual labour is more in the industry
and thus, it is essential to hire people with proper technical expertise.
Environmental- Herbet et al. (2014) stated that the environment of Singapore is one
of the best in the world. The Government and legal rules apply for the protection of the
environment. This can be a threat to the company, as construction sites may emit threat to the
environment.
Legal- Some of the areas in which Aurcon may face threat are the legal issues
protecting the environment. Apart from this, the legal laws of Singapore provide
opportunities for high growth in the market. To do so, sustainability needs to be a focus of
Aurecon.
Thus, based on the PESTEL analysis, it can be concluded that the external factors of
Singapore are favourable for Aurcon. This is because the company can be benefited by the
richness of economic growth and the talents that the country have. In the future, the growth of
technology can help the company grow more in the economy. Hence, a technical expertise
team is required for growth (Herbet et al. 2014). The important elements that affect the
external analysis include the rate at which technology can grow in the market along with the
opportunities that may befall Aurecon in the economy of Singapore. These two elements can
help in determining the success and growth of the company in Singapore.
Porter's five forces
Threat of new entrants- According to Gilbert (2015), the threat of new entrants in the
markets of Singapore can be considered to be medium, as Singapore is open to negotiating
with a business organisation that brings about economic growth. Hence, engineering and
construction industries with potential can have a significant impact on Singapore. The key

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elements for the new entrants include the technical advantage that the new organisation may
impose in the market. However, it may lack the reputation to score big in the economy.
Threat of substitutes- This threat can be considered as low as Singapore as the threat
of substitutes mainly consists of replacing one product with other (Ismail and Kuivalainen
2015). In the case of Aurecon, the company is one of the biggest engineering companies.
Hence, the rate of return that the company have and the fact that the Government finances it
makes this threat looks insignificant.
Bargaining power of buyer- The buyer includes the Government of the country. In
this case, constructing skyscrapers require the legal permission from the Government. Hence,
it is important for Aurecon to mitigate the high threat that may arise by providing proper
sustainable factors that govern the industry. The key elements to this include the prices
required for carrying out the construction and the features it may have for development.
Bargaining power of suppliers- This threat can be low for Aurecon as the company is
financed by the Government of Australia. Hence, the sellers of products to the company do
not have much bargaining option (Kane, Aman and Alam 2015). The fact that Aurecon is
famous for building sustainable products makes it difficult for sellers to re-negotiate terms
and condition with the company.
Degree of rivalry- Some of the rivals that Aurecon has included ALS Limited, SGS
Australia Holdings Pvt Limited and so on. These companies have a stronghold in another
such environmental science service, management consulting service and so on. Hence, this
poses a high threat to the company.
Thus, it can be concluded that overall the company can benefit from setting up
business n Singapore. The factors that pose a threat to the industry can be mitigated by

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cashing-in on the opportunities that arise in the economic growth. The entry to the market
may require an expenditure of huge revenue; however, owing to the reputation and the
support from the Government, Aurecon can become a huge success in Singapore.
Industry life cycle curve
According to Yan-hong (2015), industry life cycle measures the success rate of a
company or product. The manner in which a product or company may evolve in the industry
is determined by analysing four stages that exist in the industry life cycle stage. These include
introduction, growth, maturity and decline. In the case of Aurecon, the company may suffer a
similar transition phrase in its quest to finding success in the markets of Singapore.
Introduction- During the introduction stage, Aurecon can witness the small amount of
response from the customers and sellers. This is because the company brings in new expertise
in the market that can be used effectively for ensuring the growth of the market in a proper
manner.
Growth- At this stage, the company can build in the required reputation to excel in the
market. The growth can be measured by the amount of response the company is getting and
the quality of service that is being provided keeping in mind the environmental laws of the
country.
Maturity- This is the stage where Aurecon, can develop ways to stabilise its growth.
This can be done by innovating and creating new ideas about the ways to improve the
services. For example, as stated by Dibrell, Fairclough and Davis (2015) Aurecon can focus
on maintaining the sustainability of the environment.
Decline- At this stage, the customers starts to lose its interest from the company or
product. This is usually because of the emergence of a new market or due to the longing for

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new and innovative services. Aurecon needs to come up with innovative constructing ideas to
mitigate its decline.
Needs of the customers
Price- According to Dockalikova and Klozikova (2014), one of the most important
aspects that customers need to be perfect is the price. Customers need to have the best quality
product at a pocket-friendly price. Hence, it is essential for the Aurcon to maintain the prices
of the construction of their project at a minimum amount.
Quality- As stated earlier, price and quality exist side-by-side. Quality of service has
to be good so that customers can have faith in the product or company. In the case of
Aurecon, it is essential that the company ensure that the best quality is maintained by
analysing the needs and demands of the customers.
Dependability- Another important quality is the number of dependence customers can
have on a company. This can be related to the stages of product development, as fall in the
quality of services or products can hamper any chance of maintaining a steady growth in the
market (Kuratko, Hornsby and Covin 2014).
Flexibility- Flexibility means the ways by which a company can innovate its product.
In the case of Aurecon, the company need to ensure that the flexible nature of its operations
can help it to gain success in Singapore. This includes maintaining sustainability in the
environment.
Speed- The speed at which products and services are delivered is also taken into
account (Grünig and Kühn 2015). Hence, it can be said that Aurecon needs to finish its
constructions at a quick time so that customers can appreciate the project of the company and
help in its reputation.

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After the analysis, it can be said that Aurecon provides a reasonable price for the
services that it provide. This leads to the gain of profit in the company. The fact that the
company segments its market is another huge advantage for the company. In this manner,
Aurecon can be flexible in the work it does and aims to meet the requirements of the
customers.
Efficiency
In the light of the analysis of the needs of the customers and the services provided by
Aurecon, a spider web diagram can be drawn that can help in understanding the rate at which
Aurecon satisfies its customers. The factors presented in the chart are similar to that
presented in the analysis of the needs of the customers.
Price: It has been seen that the price of the products and services of the company is
reasonable and customers can afford to invest in the construction company. In Singapore, the
price does not pose a threat as the country has a rich economy that helps in the survival of the
people.
Quality: The quality of the service provided by the company is usually high and it is
important that the company maintains its efficiency in the market. The sustainability factor
needs to be maintained so that Aurecon does not violate any legal laws related to the
environment in the country (Aurecongroup.com 2018).
Dependability: With the high quality of the products and services, it is easier for the
company to earn the trust of the people. This is an important step for maintaining a
competitive advantage as Aurecon needs to increase the reputation in the market to grow and
dominate the engineering industry of Singapore (Armstong et al. 2015).

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Flexibility: The flexibility of the company depends upon the services it provides.
Aurecon needs to ensure that the flexibility it provides is line with the services that it
provides to the company.
Speed: The speed at which the company completes its works aligns with the resources
and capabilities it possesses.
Price
Quality
DependabilityFlexibility
Speed
0
500,000
1,000,000
A
B
C
D
E
Figure 1: Spiderweb diagram
(Source: Created by author)
Expertise
According to Eisingerich et al. (2016), the expertise of a company depends upon the
ways by which the resources and capabilities are utilised. Expertise may consist of the
knowledge and skills of a company and the manner in which it can implement it to get
favourable results for the benefit of the company. The analysis of the external factors that
may help Aurecon set up a profitable business in Singapore shows that the company needs to
improve in its technical level. In the modern day, technology plays a key role in the success
of a company (Albrecht et al. 2015).

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Hence, it is necessary that Aurecon maintain its technical expertise in order to gain
success in a technical market. The analysis of the company suggests that the engineering and
construction industries are indulging in the aid of technology to reduce the amount of human
labour. This can be an advantage for the company as a cost of paying the labours can be
reduced with the help of technology. Thus, this expertise needs to be developed so that
Aurecon can be competitive in the markets of Singapore.
B. Internal environment
Strategic capabilities
The strategic capability of a company includes the variations that it can make to its
products. The variations include certain factors that need to be fulfilled to ensure that the
company does not deal with the competitive disadvantage that may come in its way.
According to Blut et al. (2015), the resources and capabilities of a company remain in focus
while maintaining the strategic capability. In the case of Aurecon, the company needs to
analyse its resources and the capabilities that it has that may make it favourable in the market
of Singapore. From the analysis, it has been seen that Aurecon have a vast number of
resources that can help the company to cope up with the challenges that exist in the market.
The capabilities of the company depend upon the response provided by its target
customers and the manner in which customers accept the service. For example, it has been
seen that Aurecon manages the construction sites in a different manner. Before investing in a
new venture, the company conducts a proper analysis of the market. This helps it to
understand the level of threat that exists in the market and the level of support that the
organisation can provide it (Aurecongroup.com 2018). During the construction of
skyscrapers, the company need to ensure that the competitors replicate the resources. Instead,
it needs to be valuable to the customers so that loyalty is maintained among the customers.

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VIRO
Resource or
capability
Valuable Rare Imitable Organised
to exploit
Impact on
competitive
advantage
Presence in
the global
market
Yes Yes Yes Yes Competitive
parity
Talented
employees
Yes No No Yes Competitive
advantage
Technical
expertise
No No Yes No Temporary
Competitive
disadvantage
Regard to
environmental
sustainability
No Yes No No Temporary
Competitive
disadvantage
Table 1: VIRO analysis
(Source: Created by author)
The VRIO analysis shows that Aurecon has a competitive parity in the global market.
This means that the competitors can easily use the products and services manufactured by the
company. However, the main concern is the fact that the company lacks technical expertise
and a regard for the sustainable environment. This can be a huge weakness for the company
not only in Singapore but also in other areas (Aurecongroup.com 2018).
Sustainability and technology are the two factors that are important for the steady
growth and survival in a competitive market. Hence, it is essential that Aurecon develop these

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services so that it can beat its competitors. However, the positive factor from the VIRO
analysis is that the company have talented employees that can help in overcoming this
challenge. This is one of the advantages of the company based on which the internal
capability of the company can be forecasted.
SWOT
Strength
 High profitability
 High revenue
 Barriers to new market entry
Weakness
 Future market growth
 Brand
 Lack of technical expertise
Opportunity
 Newmarket
 Venture in capital
 Steady economic growth
Threat
 Risks in external business
 Price exchange
 Technological problem
Table 2: SWOT analysis
(Source: Created by author)
From the analysis of the SWOT, it can be concluded that Aurecon has a huge profit
and revenue collection that makes it possible for the company to grow and expand. Due to the
high profitability and revenue, it creates a barrier for new markets to enter as it provides stiff
competition. However, one of the major weaknesses of the company is its lack of technical
expertise. This weakness has been the factor in the stunted growth of the organisation. The
brand name of the company cannot be recognised without the implementation of proper
tactics that involve the technical expertise in the market. Hence, it is required that the
strengths of Aurecon act provide the support necessary for mitigating the weakness of the
company.

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The SWOT analysis also provides useful insights about the opportunities that the
company can endure. The fact that it is planning to expand its business in a new market is an
opportunity for growth. The capital required for this venture can be derived from the revenue.
The steady growth in the economy of the country is another factor that provides an
opportunity for the company. However, the risk that is posed by the external business is an
indication that Aurecon may have its resources easily imitated by its competitors. The rate at
which the company exchanges its prices also provides threats that need to be mitigated by the
company. Similarly, the weakness of technical factor also poses a threat to the company. This
is because the company need to ensure that the threats posed by the lack of the technical
expertise also exposes the company to its competitors.
Based on the SWOT analysis it can be said that the major threats and weakness of the
company include the lack of technical expertise and its brand image. Hence, to take the
opportunities provided to them, it is essential that the company hire local people. This can be
risky given the fact that not all people in the locality are technically sound. Another way to
mitigate the issue can be by establishing a technical branch in a foreign country and import
technical people from the branch.
C. Confrontation matrix
Madhavaram, Hunt and Bicen (2017) stated that the confrontation matrix can be used
to further analyse the SWOT matrix. It provides an analysis of each combination of strengths
and weakness that exist in the internal environment. This helps to identify the most important
strategic issues that a company faces.
Opportunity Threat
O1 O2 O3 T1 T2 T3
Strength S1 8 4 6 3 3 4

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S2 3 2 6 7
S3 5 8 2
Weakness W1 4 7 4 3
W2 1 6 5 7
W3 5 5 9
Table 3: Confrontation matrix
(Source: Created by author)
D. Conclusion
Thus, it can be concluded that in order to grow in the competitive market, Aurecon
needs to analyse the resources and capabilities it possesses. The manner in which the
company can rectify its technical drawback depends upon the support it receives from its
employees. Furthermore, the opportunities derived by the company after analysing the
external factors shed light on the fact that Aurecon has the potential to grow in the market of
Singapore. The richness of the economy and the growth in the market of Asia over the last
few years can contribute towards the success of the company. The strengths and opportunities
of the company can help it to gain the necessary focus for the advantage in the market.
However, it is necessary to analyse the threats and weaknesses that exist in the market. This
can help in the total analysis of the competition and help in the growth of the company.

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