IBS803: Leigh's Construction International Expansion Strategy Report

This report provides a comprehensive analysis of Leigh's Construction's international expansion strategy, specifically focusing on the construction market in Qatar. It begins with an executive summary and a table of contents, followed by an introduction to international strategic management and its r...Read More

RUNNING HEAD: INTERNATIONAL EXPANSION STRATEGY
International strategic management
Name of the student
Name of the university
Author note

1INTERNATIONAL EXPANSION STRATEGY
EXECUTIVE SUMMARY:
The international strategic management is an important area of concern for those
organisations who aim at the expansion policies. The main tools to get an idea of a profitable
expansion structure are to analyse the macro environment of the selected country and the internal
condition of the organisation. Tallying the condition of both, the most effective strategies are to
be chalked out. The current report deals with the construction company of New Zeeland, by the
name of Leigh’s Construction, who are planning to expand their business in Qatar. The report
analyses in detail the present condition of Qatar and the internal condition of the organisation.
From the analysis derived, the report sets a rationale for why Qatar is the best option. It then
recognises some of the most effective strategic policies for the business so that it has a profitable
market in the target area.

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Table of Contents
Introduction:....................................................................................................................................3
Global context of Construction Industry:........................................................................................4
Construction industry in Qatar:.......................................................................................................4
SWOT Analysis of Leigh’s Construction:.......................................................................................5
MACRO ENVIRONMENTAL ANALYSIS OF QATAR:............................................................7
Political Factors:..........................................................................................................................7
2. Economic Factors:...................................................................................................................8
3. Social Factors:.........................................................................................................................8
4. Technological Factors:.............................................................................................................9
Environmental Factors:..............................................................................................................10
Legal Factors:............................................................................................................................10
Conclusion:....................................................................................................................................10
Recommendations:........................................................................................................................11
International Business Strategy:................................................................................................11
Market Entry Strategy:..............................................................................................................13

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Introduction:
The International Strategic Management is the management process that is used to
develop the international strategy so that the company is able to achieve the strategic fit between
the environment where they are going to work and the competence of the organisation (Cavusgil,
Knight, Riesenberger, Rammal& Rose, 2015). The process is supposed to be an ongoing one that
will help the company to compete in the International scenario.
A company has to generate an International strategic Management policy that will aim at
developing the strategies of the organisation so that it can effectively expand abroad. The
company has to determine and communicate effectively about the product or service that it is
doing to sell. After identifying the target market and target space, the company needs to assess
the objectives in the determined market. The long term objectives includes the crafting of a
vision statement and the formation of the strategic business unit objectives as well as the tactical
objectives (Davis, 2012).
The current report deals with the international expansion strategies that the Leigh’s
Construction can undertake in their mission of expanding their business in Qatar. Leigh’s
Construction presently operates in the New Zeeland that delivers their construction in various
sectors like education, retails, commercial offices, primary industries both in their homeland as
well as abroad. At present, the company has decided to expand the business in Qatar. The report
will analyse the micro and macro environmental situation of the company to identify the
profitable and convenient method of International Strategic Management for the company and at
the end, it will recommend the most suitable strategies for the company.

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Global context of Construction Industry:
In 2017, the global construction market was valued around $17 trillion. This industry
includes within it the physical process of construction s, any kind of architectural services or
civil engineering. It has been identified that Asia-Pacific is at present the largest market for the
industry. It has also been identified that in an environment where the interest rate is low and
technology is developing, the scope for global construction market is likely to increase. The
Leigh Construction states in their official website that their purpose is to serve effectively the
construction requirements of their homeland as well as in the overseas market that they are
serving in and in turn making the company a premier and well known solution for construction
projects. Thus, in order to be profitable enough, the company must aim at their expansion polices
in the larger markets.
Construction industry in Qatar:
Qatar, located in the Western Asia, occupies the small Qatar peninsula has the total
population of 2.6 million according to the 2017 census where 313,000 population were actual
Qatari and 2.3 million were expatriates (Al-Ansary, &Iyengar, 2013). Qatar is reputed for its
highest Per Capita income in the world. Construction market in Qatar has been developed as a
result of the improvement of the transport infrastructure and increase in population. The country
has also shifted its focus in the creation of some world-class sporting venues. Among the large
scale construction projects, the main one includes the creation of stadium as well as the
formation of the non-residential constructions in the preparation for FIFA 2022
(Brannagan&Giulianotti, 2014). The main trends in this sector includes the development of the
transportation, modern residential and non residential structures in order to accommodate the

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rising population. Moreover, the government is also keen in developing the construction sector to
improve the tourism market of the country. The construction sector of the country has
experienced a massive growth rate in 2018 since the government spent over 47% of the national
budget on the construction process that included the expressways a well as the local rods. The
government is also encouraging the opening up of the economy for the foreign markets and the
interested investors.
Thus, analysing the present trends of Qatar in the construction industry, it can be said that
Qatar is a favourable selection for Leigh Construction in their expansion project. The growing
market for Qatar and its high GDP rate is definitely an added bonus for the investors.
SWOT Analysis of Leigh’s Construction:
STRENGTH
Has a large range of portfolio
Employer Branding is high
High Annual revenue
WEAKNESS
Branding is not strong enough
Does not have a broad global presence
Lesser number of employees
Total funding is low
OPPORTUNITY
Growth in global market
Make a definite brand image
THREATS
High level of competitors in both homeland and
overseas
Huge operational cost.

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The company has a range of expertise not only in residential construction but also in the non
residential constructions like schools, commercial offices, health and others. This is
definitely one of their strength as they are not confined in a particular sector and explores
a long range of projects. This expertise helps the company in undertaking a vast range of
projects. The company also holds the reputation of having a deft leadership imparted by
the CEO Anthony Leigh, who holds aemployer review of 70% which is quite high among
the competitors. This strength will help the company in attracting the potential candidates
from the country they want to put their feet in. The company has annual revenue of $170
million, which is quite high in comparison with its competitors. This high revenue will
help the company to invest more in the new country where it has planned to introduce
itself. Leigh’s Construction has, however, some shortcomings that makes the company a
little vulnerable in their expanding structure. The brand image of the company is not
strong enough to have a loyal customer base. The company has hardly featured itself as
offering something special or premium. Moreover, the company is yet not present in
various countries and thus, they are not a globally well-known company. The number of
employees in Leigh’s construction is only 197, which is not enough to conduct huge
projects or multiple projects at the same time (www.leighsconstruction.co.nz) . The
company still has scopes and opportunities to extend its business overseas as it has a
strung employer branding who will be able to attract a good market in the target area.
Moreover, the company shows a wide range of portfolios. They are experts in making
various types of constructions that will enable it to establish itself at any kinds of
demands. They can increase their brand image as a versatile brand. The major threats that
the company faces is the threat of competitor. The major competitor of the brand in their

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homeland is Canam, CMC, Stantec, Gerdau etc. Canam is superior to Leigh’s co
struction in terms of revenue as well as number of employees. CEO score of Canam and
CMC are also high than that of Leigh’s Construction (Carson & Abbott,2012). This
condition has made the company inevitable to expand its business in order to sustain in
the market and to get a competitive advantage. The construction industry is rising
globally. Hence, the market of the same is also a competitive one. This also imposes a
threat for Leigh’s Construction as it has to seek for a more compatible and suitable
international strategy so that it can hold its existence. The construction industry is one
that requires a lot of capital and investment. The hiring of labourers, the engineers and
other works and machineries for those requires a huge amount of operational cost. Thus,
if the revenue is not high enough, it is hard for the company to sustain. Leigh’s
Construction is ranked sixth among the top ten competitors in construction industry in
New Zeeland in respect of revenues. This, definitely poses a threat to the company.
MACRO ENVIRONMENTAL ANALYSIS OF QATAR:
The small country of Qatar has the population of both the native Qatari and expatriates
and has a government that is of emirate type. The country being a fast developing one is a good
and potential target market for various foreign and multinational companies. In order to decide
whether the environment of Qatar is suitable for a particular business, the following things are to
be considered:
Political Factors:
The government type followed in Qatar is emirate based and it has the vision of emerging
as a monarchy type of government in recent future. However, the country still does not give

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permission to any political group to emerge. The adult suffrage of the country is primarily
restricted in the metropolitan races only. The municipal corporation ha been chosen, but that is
merely statutory as it has no official powers. However, it is entitled to give suggestions to the
ministers. A huge number of expatriate lives in the country but they are not entitled to gain the
citizenship (Shenkar, Luo& Chi, 2014). It has been announced that the FIFA World Cup is going
to be held in Qatar in 2022 and thus it will require a vast scope of premier construction projects
where the football will be played. Thus, at present the country has emerged to be one of the most
essential business hubs for the industrialists from outside. It has tremendous stores of oil and it is
primary wellspring of pay. Individuals are satisfied with the offices, which are given to them and
government has great relations with every single neighboring nation and other created nations of
the world.
2. Economic Factors:
Qatar has a solid economy that is derived mainly from the gas and the natural oil from the
country itself. Thus, the industrialists and the organiasations have ample scope for setting up a
profitable business in the area. It has been speculated that in the coming years Qatar will emerge
as an important business sector in the coming years. In 2010, the development of the GDP of
Qatar was speculated to have increased by 3.9% and is expected to touch a 18% in 2020. The
high rate of GDP is primarily because of the hydrocarbon income and because of the government
who gives a lot of backup to the economy of the country. (Rothaermel, 2016).

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3. Social Factors:
The residents of Qatar and the government have a special eye for the development of the
education system in the country. The local people are often migrating to foreign countries for the
pursuit of education and on coming back; they are entitled to hold key positions in various
sectors of the country (Erdoğan&Gedikli, 2018). This has helped the country in saving a large
amount of funding that was spent for paying the foreign nationals.
The country is also strictly traditional in terms of keeping their Islamic culture alive and
rich. The people of the country are known to be quite polite, hospitable and generous. The people
have also the mentality of implementing the plans of investing financially to a project and
starting to work on it together and thus, making the economy stronger (De Bel-Air, 2014). This
has made the country quite self dependent and various sectors have grown up effectively in the
country. This can be however, described as a threat for the foreign investors to invest in the area
since, they themselves are able to make whatever is required. The country has also the tradition
of supporting the clients in the sector of trade, service, finance and tourism. It has been proposed
that the FIFA World Cup will take place in Qatar which will increase the business activities in
the land.
4. Technological Factors:
The country has been developing rapidly in sectors of mobiles and computer technology.
People of the country have access to social medias and official websites of any companies as
they use of internet is quite high in the region (Nafi, 2013). The airline sector has also been
developed by the government and in the exploration of oil and natural gas, which is the main
source of income in the country, the country is also using new technologies. The country is also
looking forward for trade relationships with foreign countries for the maximum usage of their

10INTERNATIONAL EXPANSION STRATEGY
resources. Any kind of technological development is welcomed in the country (Jarkas, Kadri&
Younes,2012).
Environmental Factors:
The environmental Protection Committed has been set up by the Ministry of Industry and
Agriculture so that the factors causing environmental hazards can be checked effectively. The
government of the country is strict in respect of environmental pollution Green and eco friendly
atmosphere s encouraged by the environmental laws of the land. The companies that are based in
the country, or those who wants to step their foot n the country have to act according to the
environmental laws and regulations (Mahgoub, &Qawasmeh, 2012). With the announcement
that the FIFA world cup will be held in Qatar, the government is more focused in making
buildings, hotels and apartments for the players as well as the audiences who will visit the place
from abroad.
Legal Factors:
The judicial system is quite strong in the country. The laws are effectively made and
implemented and each individual as well as the organisation are bound to abide by the laws.
Qatar thus ensures a high score in safety of lives and the properties of the individuals residing
there. The organisations, may it be domestic or international, have to abide by the rules and the
safety regulations of the land.
Conclusion:
From the above discussion, it is evident that politically Qatar is a stable area with a vast
range of population from various sections, Islam being the main religion. Moreover, the country
is a great scope for the construction industry as the upcoming football World Cup will create

11INTERNATIONAL EXPANSION STRATEGY
opportunities for a vast range construction project, which can be grabbed by the foreign
construction companies. Moreover, the country is financially very stable with the highest GDP in
the world. This means that the demand will be higher and the people of the country will be able
to pay the necessary revenue required for the construction. However, the company has to keep in
mind the legal regulations of the country and the investment laws to make a profit. Qatar being a
Muslim country predominantly is to some extent aligned towards the tradition of Islam and the
constructions in the area tend to be reflecting the domes or Islamic structure influenced by
Byzantine or Persian lands that the Muslims conquered in seventh and the eighth century. Thus,
the constructors need to have a definite knowledge about the styles of architecture of the land. In
order to succeed in Qatar, the company can take into account the recommended International
Strategic management.
Recommendations:
International Business Strategy:
This strategy enables an organisation to plan and guide the mode of commercial
transactions between the original company and the host country. This strategy is effective in
planning for the goals of the company in the international environment. The mode of doing
business in the international environment varies from company to company because of the legal
system, political systems and complexities in the International trade. Another major factor
affecting the mode of business is the product or service that a particular organisation is offering.
According to Bartlett and Ghoshal Model (Briding, 2016), the international business strategy
mainly follows the two dominant pressures namely the global integration and the local
responsiveness. The local responsiveness takes into account the following question:

12INTERNATIONAL EXPANSION STRATEGY
1. Do the target market of the organisation expects that the product will be adapted according to
meet the requirements of the local people?
2. Does the adaptation will hold any advantage for the profit in the business?
The global integration seeks to ask that whether the global consistency will be beneficial
for the organisation. (Verbeke, 2013)
In business strategy where there is no as such pressure of local responsiveness and the global
method is accepted and preferred by the host nations, the convenient business strategy will be
Global. However, in products, which need high range of local adaptations and high global
integrations, the company makes the transnational attitude. This means that the company, under
their own brand name will be producing their own products, however, will make some
personalised approach in marketing and selling the products. In places where there is low
pressure for global integration and low pressure of local responsiveness, the operations are
managed largely by the central, however, the organisation focuses on the domestic activities as
well in making profit (Johnson, 2016). this is called the international approach. In the business
situation where the local responsiveness is high but the global integration does not matter much,
the companies shift mainly on vastly customising their products to meet the local needs. This is
called the multi domestic approach.
In case of the Leigh’s construction, the company serves a general service. The
requirement of construction is more or less the same way globally and there is no location wise
preference constraint for this. The engineers make the designs after understanding the need of the
construction and area available. Thus, neither global integration, nor the local responsiveness
will matter much in the segment. The only thing required is efficiency and versatility. Analysing

13INTERNATIONAL EXPANSION STRATEGY
the context, it is thus, recommended that Leigh’s Construction can undertake the International
Strategy in business.
Market Entry Strategy:
Market Entry Strategy is the management strategy that needs to be planned and
undertaken by the company that selects the distribution as well the delivery method of the
product or the service offered by the company to the target area. The options for selecting a
suitable market entry strategy variers with the risk, cost of operation, financial condition of the
company and the legal rules implemented by the government in context of business. The main
options that are open for a company are:
1. Exporting: the most traditional way of entering into the market is exporting where the goods
produced into one country is marketed into other (.Artopoulos, Friel&Hallak, 2013) This method
needs a significant manufacturing investment, but direct manufacturing is not required.
2. Franchising: the franchising system refers to the mode of allowing an operator to use the
trademark of the suppliers and are allowed to distribute the supplier’s goods.
3. Joint Venture: this approach can be defined as “An enterprise in which two or more investors
share ownership and control over property rights and operation.”(Killing, 2013). This system is
effective in entering the foreign market by form of collaborating and taking the helps from the
local organisation in knowing about the market condition.
In the case of Leigh’s construction, the best way for the market entry would be entering
into the market by joint venture. The Joint Venture Strategy will help the company in the
following way:

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1. The company do not possess a large amount of revenue. In respect of revenue, it stands sixth
among the top ten competitors (Killing, 2017). Thus, evidently, it has not much revenue to run a
total operation in foreign market. Joint Venture will ensure a shared financial responsibilities.
2. The company is not fully aware of the environment and legal process of the chosen country. A
joint venture will help the organisation in gaining the assistance of the local companies so that
they get a total idea of the operational structure.
3. Leigh’s construction is not a globally known company and does not have a strong brand
image. Thus, it will be difficult to set up a strong business in a new land since the people may not
accept them. A joint venture plan will have a known face in front of the local people.

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www.leighsconstruction.co.nz