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Mgt 523 - Strategic Management in a Global Environment - Uae's Construction Sector Waits for 2020 Wave

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Abu Dhabi University

College of Business Administration

Strategic Management in a Global Environment

MGT523

 

Environment  scanning reports 1

Article Tile : UAE's construction sector waits for 2020 wave

  1. Summary of issues

The Construction industry forecast big growth as reflect of Dubai Expo 2020. Many construction companies should be ready for in beginning of 2016 to start up a huge projects. Many sector also will be affect with this growth. Company  waiting on the government and government-related entities to come out with all the resources at their command from next year onwards. That much needs to built between now and when the Expo 2020 opens is what gives the industry a lot of support in the temporary, and why they are willing to grit it out as payment terms stretch well beyond 120 days and when project promoters unilaterally renegotiate the pricing on the original contracts. At the subcontractor level, businesses are getting caught out by lack of cash flow and higher inventory. Currently, there is a surplus capacity on cement as far as the region is concerned. There will likely be a delay in the implementation of some of these which will, in turn. impact on the level of imports. For steel demand, market sources are forecasting an “additional 10 per cent on annual basis from 2017” from the current average of 5-15 per cent a year. “The main factor that influences the price and demand in the UAE is inventory. If traders stock more, then selling prices come under pressure. If traders only consider buying from local producers, they will be able to maintain prices.” local construction sector and its players, it’s about getting their pacing right for the stretch leading up to the mega projects for the Expo as well as those not connected directly with it.

  1. The main issue

The construction industry will grow as required projects to be implemented for Dubai expo 2020  and the demand for the building materials will increase rapidly.  

  1. Other issues
  • High level of building material inventory the concentrate on the time line of the projects.

  1. What is the impact on your company?

It Has positive impact as the sales relatively will increase and also show a sustainable demand to cover the construction and building development in UAE and specially Dubai  

  1. Rate/weight of impact

Weight

Rating

Impact

Issue

1

High

  • Positive impact
  • demand for the building materials will increase
  • potential profitability  

Construction industry increase and the demand for materials increase    building

1

High

Negative

Financial cost

High level of building material inventory 

  1. What is the Urgency of the Issue ?

Weight

Rating

Urgency

Issue

5

Medium

It urgent as the project will be implemented soon

Building materials companies will compete to be part of those project

Construction industry increase and the demand for materials increase    building

1

High

It urgent as this point will affect Arkan as cost

High level of building material inventory

        

  1. Nature of issues, implications on your company, and recommended actions

Weakness

(R+W)

Strength

(R+W)

Threat

(R+W)

OP

(R+W)

Operational

Strategic

Urgency

        (R+W)

Impact

(R+W)

Issue(s)

M4

The Vision and mission of the company

They al ready provide and support many projects

The have available sock

Many competitors involved

H4

Its very good opportunity  for the building materials  industry to grow and specially Arkan as it has very good history as part of huge projects that exceed the expectation

ST

  • As the company should focus in the future demand
  • And the expected future projects and the construction development in UAE
  • The Companies must consentrate in the standard quality and the sustainable method for providing the materials

M5

H1

Construction industry increase and the demand for materials increase    building

Many competitors invoved

  • Additional inventory cost depend on the Time line

Arkan has to have good strategy to distribute the material in good time to avoid any change in the quality material as Cement.

H1

H1

High level of building material inventory

...

...

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