Importance of Determining External and Internal Factors in Construction Management

This report discusses the importance of determining external and internal factors in construction management, with a focus on the business scenario of Oman. It includes a macro and micro environmental analysis, along with recommendations for long-term effectiveness.

Running head: CONSTRUCTION MANAGEMENT
Construction management
Name of the student
Name of the university
Author note

1CONSTRUCTION MANAGEMENT
Table of Contents
Introduction........................................................................................................................2
Literature review................................................................................................................2
Business scenario of Oman...........................................................................................3
Influence of the external factors.....................................................................................3
Importance of determination of external factors............................................................4
Influences of the micro factors.......................................................................................5
Importance of determining the internal factors..............................................................6
Macro environmental analysis...........................................................................................6
Political factors...............................................................................................................6
Economical factors.........................................................................................................7
Social factors..................................................................................................................7
Technological factors.....................................................................................................8
Micro environment analysis...........................................................................................8
Strengths........................................................................................................................8
Weaknesses...................................................................................................................8
Opportunities..................................................................................................................8
Threats...........................................................................................................................9
Scenarios building in Ceed................................................................................................9
Recommendations...........................................................................................................10
Conclusion.......................................................................................................................10
Reference........................................................................................................................11

2CONSTRUCTION MANAGEMENT
Introduction
In the current business scenario, it is the important for the contemporary
business organizations to have the effective determination of their macro and micro
factors. This is due to the reason that the current business state of affairs are highly
competitive in nature and the external factors are having larger influences on the
decision making process than ever. Moreover, the contemporary business organizations
should have design their internal management strategies in accordance to the external
factors due to the reason that coordination should be there between the two in order to
have the maximum favorable outcome. However, on the other hand, this should also be
noted that influences of the external factors are different in different organizations due to
the fact that the business scenario for each of the organizations is different.
It is identified that of the construction industry of Oman is one of the highly
competitive sectors in the country. This is mainly due to the reason that Oman is fast
developing and domestic infrastructure is witnessing huge inflow of funds and
investments. Thus, this sector is booming and attracting more players. On the other
hand, this market condition is also posing challenges for the existing players as
entrance of the new players is affecting their profitability and business viability (Islam
and Khadem 2013). One of these organizations is Ceed, which is operating in the Oman
construction sector from the last decade. They are one of the well established names in
the country but facing the threat from the new entrants in terms of the market saturation.
Hence, it is important for them to determine the major external factors in their business
along with identifying their influences on their operation and design the micro level
factors accordingly.
This report will critically discuss about the importance of determining the macro
and micro factors and how it can help them in their strategic analysis. In addition, this
report will also discuss about the major and relevant macro and micro fact0rs identified
for Ceed. Probable scenarios will be built based on these factors along with discussion
about the recommended steps to be taken for long term effectiveness.
Literature review

3CONSTRUCTION MANAGEMENT
Business scenario of Oman
As per different authors, there are different definitions being given regarding the
effectiveness of determining the external environment. However, prior to the analysis on
this topic, it is important to have the basic understanding about why determination of the
external environment is important in the context of Oman business scenario. According
to Baporikar (2016), Oman is expected to have the growth rate of over 2 percent and it
will be maintained till 2020. Thus, it is denotes that development will be a continuous
process in Oman and it will also help the construction sector to leverage on the
increasing demand for improved infrastructure in the country. In addition, it is also being
stated by the authors that with globalization of the national culture of Oman, business
scope is also getting increased and both for the internal firms to invest in Oman for the
domestic firm to opt for foreign markets. Hence, from the information gathered from this
article, it can be stated that business sector of Oman is going through a developmental
phase and external factors will frequently be changed. This is also making the
importance for effective determination of the external business factors in doing business
in Oman.
Influence of the external factors
One of the major influences of the external factors is in terms of the sustainable
business models. This is due to the reason that external business factors determine the
extent to which the business operations will be sustainable enough to survive in the
competition. According to Boons and Ludeke-Freund (2013), political and legal factors
are important to consider in the current business situations. This is due to the reason
that changes in the legal and political factors will affect the entire business operation in
the particular region. For instance, if Oman faced political turmoil in the country, then it
will create barrier in the investment sources and growth will get hampered. On the other
hand, introduction of newer regulations and standards may have both positive and
negative impact on the business relevancy. Thus, having the understanding about the
potential positive and negative impacts of external factors should be gathered by Ceed
for their long term effectiveness.

4CONSTRUCTION MANAGEMENT
As per Gupta, Guha and Krishnaswami (2013), external factors are also having
influences on their economic decision making process. This is due to the fact that social
factors and economical factors will determine the degree to which the particular
business organization can be have the market share and penetration. For instance, if
the business organization cannot cope up with the change in the taste and preference
pattern of the target customer segments, then their business model will get failed. On
the other hand, the corporate level strategies of the business are also being influenced
by the economical factors. If the particular host country is going through recession, then
the business strategies will be more defensive and vice versa. Thus, it can be
concluded that based on these influences of the external factors, it is important to have
the effective mechanism of determination of them.
Importance of determination of external factors
According to Baranenko et al. (2014), industries with having innovative approach
of doing business is having the major importance of determining the external factors.
This is due to the reason that innovations will be a success only when it will get
matched and aligned with the external factors of the particular industry. This is due to
the reason that the more effective will be the determination of the external factors, the
more will be their further effectiveness in having the understanding of how to fetch the
maximum outcome from it. Thus, as per the authors, implementation of the external
factors determining mechanism, business organizations can have the understanding
about the potential threats and opportunities along with their impacts.
On the other hand, it is stated by Chen et al. (2014) that in the current era of
improved technologies and information capability, the external factors are becoming
more challenging for the contemporary business organizations. This is due to the fact
that business process agility is getting increased in the industry and the companies with
having the greatest coordination with the external factors will gain the competitive
advantages. Moreover, it is also being stated that with the rapid change and
development in the technological sector, the changes in the external factors are also
getting more frequent and fluctuating. This is also creating the urgency of determining
the macro factors and to have the competitive edge over others. In terms of the

5CONSTRUCTION MANAGEMENT
business operation of Ceed, they are witnessing rapid development and inflow of new
players in the market and thus their business surroundings are getting rapidly changes.
If they do not have the understanding about these changes, then it will be difficult for
them to stay relevant in the competition.
In the current time, effective determination of the external environmental factors
is being considered as a critical success factor. This is due to the fact that competitive
advantages can be gained from this. As per Alias et al. (2014), business organizations
should be competent enough to cope up with the changes in the market and offer the
market oriented products and services to the targeted customers. It is important for the
players in the construction sector of Oman to be able to identify the key major external
factors and design their product and service strategies accordingly. Hence, it can be
concluded that determination of the macro environmental factors can be termed as a
critical success factor for gaining the long term competitive advantages. This will also
enable Ceed to have the understanding about the market and business requirements
and value proposition to meet these criteria. They can be able to stay immune in front of
their newer and existing competitors.
Influences of the micro factors
Apart from the external business factors, micro level factors are having larger
influences on the business. This is due to the reason that the internal effectiveness of
the organizations is depended on their micro factors. According to Sahut and Peris-Ortiz
(2014), micro level factors are having the maximum influences on the small scale
business organizations. This is due to the reason that these organizations depend on
their internal effectiveness to stay competitive in the industry. Micro level factors include
the effectiveness of the business strategies of the organizations. Thus, effective and
market oriented business strategies will be beneficial in meeting the expectations and
requirements of the target customer segments along with achieving the business
objectives. On the other hand, it is stated by Bayarcelik, Tasel and Apak (2014), that
innovation is also being influenced by the effective internal factors. This is due to the
reason that the internal organizational elements such as the structures, process and
practices are being responsible for successful initiation of the innovations. The authors

6CONSTRUCTION MANAGEMENT
have also stated that innovation is depended on the effectiveness of the human
resource management approaches of the organization. If the employees are being
managed effectively, then the chances of generating innovative ideas will be more in the
long term vice versa. Furthermore, the skills and expertise of the employees will also
determine the degree to which, the business can achieve competitiveness in the
competition.
Importance of determining the internal factors
In the above section, influences of the internal factors are being discussed and
thus it is important to have the understanding about the importance of determining the
internal factors relevant for the business operations. Llach et al. (2013) stated the
example of a restaurant in discussing about the importance of determining the internal
factors. It is stated that determination of the internal factors will help the business
organizations to have the knowledge about their effectiveness in dealing with the
external factors. This is due to the reason that the macro factors are beyond the control
of the organizations, while the internal factors can be controlled. Thus, it is important for
the business organizations to have the understanding about their internal
competitiveness to deal with the external challenges. On the other hand, it is stated by
Belas et al. (2015) that determination of the internal factors will also help the business
organizations to have the understanding about their areas of improvement in the long
term. Thus, as per the authors, determination of the internal business factors will help
the business organizations to identify their internal strengths and weaknesses in dealing
with the external organizational challenges.
Macro environmental analysis
Political factors
As per the global economy, long term political risk of Oman is on the lower side.
This denotes that doing business in Oman will involve lower sets of political turmoil. It is
also identified that political stability in the country is fluctuating in nature. As per the
reports, political stability is improving at slower pace after 2011 in Oman. This will also
help Ceed in the construction sector to have the chance of better favorable political

7CONSTRUCTION MANAGEMENT
situations in the country. However, on the other hand, it should also be noted that the
corruption sector of Oman is facing the negative impact of corruption. As per the
reports, corruption ranking of Oman is reducing in the recent time and as of 2015, they
are standing at 45. This denotes that the intensity of the corruption is increasing in the
Oman business and will affect the viability of Ceed.
Economical factors
It is reported that the construction sector of Oman is the fastest growing segment
in the entire Middle Eastern region. This is mainly being motivated by the extensive
investment in this sector along with the favorable economic growth in the country. It is
also identified that till 2020, Oman will have positive economic trends, which will further
increase the opportunities in the construction sector. Moreover, as per the forecast of
the International Monetary Fund, investment trends in the country are increasing and
this will also have positive impacts on the construction sector. However, it is should also
be noted that construction sector of Oman is plagued due to lower exchange rate
Omani currency against dollar. It is reported that the exchange rate of Omani currency
against dollar is negative and this is casing the foreign players to have the cost
advantages over the local players.
Social factors
Construction sector is one of the biggest employers in Oman and thus having
favorable considerations among the societies. However, the higher cost of human
resources is causing the increase in the immigrant employees, which is further draining
of the capital resources. Increase in the population growth rate can also help the
construction sector to secure more opportunities. This is due to the reason that the
more will be the population, the more will be the demand for better infrastructure, which
will help the construction sector to have more potentialities.
Technological factors
Technology is one of the key factors in gaining competitiveness for the
construction sector as this will ensure the reduction in average operating cost and
increased efficiency. In terms of the innovation index, Oman witnessed a drastic fall in
2013, which further regained partially in 2015. Currently, increasing trend is showing

8CONSTRUCTION MANAGEMENT
and this will help the construction sector also to tap the advantages of developed
technologies.
Micro environment analysis
Strengths
One of the major strengths of Ceed is their brand value and exposure. This is
due to the fact that they are operating from last decade and this is causing better brand
penetration in the country. This is helping them to build the trust factor among the target
customers. Being an Oman born brand, Ceed is having the advantage of having the
knowledge of local trends over their foreign competitors. The diversified services being
offered by Ceed in the construction sector is helping to cater to different needs of the
customers ranging from domestic to industrial customers.
Weaknesses
Brand value of Ceed is low as compared to some of the global entities. This is
due to the fact that Ceed is centered only in Oman and thus their identity is also limited.
Technological development is limited for Ceed considering the leadership of the global
brands. Thus, they are trailing behind in terms of efficiency and effectiveness.
Recession in the Oman economy will have adverse impact on Ceed due to the fact that
they are having their business in Oman only. Thus, the risk factors are more for Ceed
compared to their competitors.
Opportunities
Entering in the other countries especially in the Asian developing countries such
as India and China will have huge opportunities for Ceed. Both these countries are
witnessing huge economy growth and infrastructural development. Developing the
technology and keeping it at par to the global standards will help Ceed to reduce their
average cost of operation and increasing the profitability. Further investments and
opening up of the economy of the Middle Eastern countries will pose opportunities for
Ceed in their business.
Threats

9CONSTRUCTION MANAGEMENT
Introduction of the stringent regulations in terms of the business operation of the
construction industry will pose challenges for Ceed in further expansion. Emergence of
recession will also pose challenges for Ceed to maintain their profitability mainly by
operating in single market. Regulations related to the pollutants being emerged from the
construction industry will also restrict the business potentiality of Ceed.
Scenarios building in Ceed
There are number of negative and positive factors being identified from the
above micro and macro environmental analysis. It is important for Ceed to have flexible
organizational approach in order to have the ability to change the existing processes
according to the business needs. In the above analysis, it is identified that majority of
the external factors are fluctuating in nature and can have different impacts in different
time. For instance, if Oman faces recession, then it will be important for Ceed to change
their growth strategy and initiate more defensive strategies in retaining the existing
business. This can be made possible only when Ceed will have flexible organizational
systems in place. On the other hand, initiation of the cost leadership strategies can also
be beneficial for Ceed. This is due to the reason that in case of intense competition,
initiation of the cost leadership strategies can be beneficial in attracting more customers
and regulating the cost of operation. It should also be noted that Ceed may face barriers
in entering in the foreign markets due to different regulations and in this case their
business intensity and diversity should be more in Oman. This will ensure that existing
business of Ceed in the Omani market is well established and penetrated. In the above
analysis, it is also identified that Ceed is having lower brand value compared to their
global competitors. This is affecting their viability in the home market. Thus, the
strategic option available for Ceed is to focus more on quality over quantity. This will
help in generating positive word of mouth from the existing customers and provide
competitive edge to Ceed in the long term.
Recommendations
It is recommended that market growth strategy should be initiated by Ceed in
order to enhance their viability. This is due to the reason that with the help of the growth
strategy, they can be able to have their presence in more countries other than Oman

10CONSTRUCTION MANAGEMENT
and the risks associated with their business in Oman will also get reduced. Ceed is
recommended to take the path of strategic relationships with other firms in order to gain
competitive advantages both in Oman and other countries. This is due to the reason
that with the help of mergers and acquisitions, Ceed will be able to increase their
footprint both in the domestic as well as in the international market. It is also
recommended that certifications regarding the environmental standards should be done
by Ceed in their operations. This is due to the reason that construction industry is long
accused for polluting the environment and has attracted a number of legal regulations in
controlling their activities. Thus, with the help of the environmental certifications, Ceed
will be able to manage their sustainability along with reducing the cost of pollution
control systems.
Conclusion
This report concludes that determination of the external and internal
environmental factors is important for the business organizations in order to have the
knowledge and understanding about their major threats and opportunities. Moreover, it
is also concluded that determination of the environmental factors will also help the
business to design their organizational processes accordingly. SWOT and PESTLE
analysis are being done to identify the major micro and macro factors for Ceed
construction of Oman. Based on the challenges and opportunities identified from the
analysis, scenarios are being forecasted along with the probable strategic response of
Ceed. A few recommended steps are also being discussed in this report, which can
further help them in enhancing their long term business viability. It is concluded that
continuous process of environmental analysis can help Ceed to gain competitive
advantages and staying ahead in the competition.

11CONSTRUCTION MANAGEMENT
Reference
Baporikar, N., 2016. Effect of national culture on development of international business
in the Sultanate of Oman. In International business: concepts, methodologies, tools, and
applications (pp. 397-417). IGI Global.
Baranenko, S., Dudin, M., Lyasnikov, N. and Busygin, K., 2014. Use of environmental
approach to innovation-oriented development of industrial enterprises. American journal
of applied sciences, 11(2), pp.189-194.
Bayarçelik, E.B., Taşel, F. and Apak, S., 2014. A research on determining innovation
factors for SMEs. Procedia-Social and Behavioral Sciences, 150, pp.202-211.
Belás, J., Demjan, V., Habánik, J., Hudáková, M. and Sipko, J., 2015. The business
environment of small and medium-sized enterprises in selected regions of the Czech
Republic and Slovakia. E+ M Ekonomie a Management.
Boons, F. and Lüdeke-Freund, F., 2013. Business models for sustainable innovation:
state-of-the-art and steps towards a research agenda. Journal of Cleaner
production, 45, pp.9-19.
Chen, Y., Wang, Y., Nevo, S., Jin, J., Wang, L. and Chow, W.S., 2014. IT capability and
organizational performance: the roles of business process agility and environmental
factors. European Journal of Information Systems, 23(3), pp.326-342.
Gupta, P.D., Guha, S. and Krishnaswami, S.S., 2013. Firm growth and its
determinants. Journal of Innovation and Entrepreneurship, 2(1), p.15.
Islam, M.A. and Khadem, M.M.R.K., 2013. Productivity determinants in Oman
construction industry. International Journal of Productivity and Quality
Management, 12(4), pp.426-448.
Llach, J., Perramon, J., del Mar Alonso-Almeida, M. and Bagur-Femenías, L., 2013.
Joint impact of quality and environmental practices on firm performance in small service
businesses: An empirical study of restaurants. Journal of Cleaner Production, 44, pp.96-
104.

12CONSTRUCTION MANAGEMENT
Sahut, J.M. and Peris-Ortiz, M., 2014. Small business, innovation, and
entrepreneurship. Small Business Economics, 42(4), pp.663-668.