China Communications Construction Company ltd is the publicly traded and state-owned multinational company. The company specialized in construction and engineering primarily operating in construction, infrastructure, designs including bridges, highways, tunnels, subways, railways, marine ports, and airports. Along with the subsidiaries, the company has complete EPC capabilities by actively pursuing the P3 projects. The company also provides the dredging services. It also engages in the oil platform construction and design. CCCC is the biggest port design and construction company in China. It is a leading company in bridge and road construction company. It is also one of the leading container crane manufacturers. The company is operating 34 completely controlled or owned subsidiaries (CCCCltd, 2019).
Porter five forces model help the company in identifying the strategic position of the company. The model also determines the external factor analysis of the company. The industrial analysis helps the company in making competitive decision and re-examine the strategies. Here is the detailed Porter five forces analysis of China Communications Construction Company Ltd;
Bargaining Power of Buyers
The buyers of the construction industry have limited bargaining power. This is mainly because of the availability of many construction companies as compare to buyers. However, in case of China Communication Construction, customers are mainly government or big clients. They have little control over prices charge by the company. It is necessary for the company to increase the customer base and expand itself in other areas to mitigate the risk. The company is highly specialized in its operations and should have competitive edge over it. Moreover, customers always want high quality service in lowest possible prices. The company should keep it in mind while making strategies (Halak, and Reinke, 2011).
Bargaining Power of Suppliers
The bargaining power of the suppliers have limited power. This is mainly because the equipment involves in the construction industry in highly specialized. There are few suppliers of it as compare to the buyers. Hence, they use their control over prices. Moreover, the human force is expensive with the technicalities involved in the work. Regardless of this, the company maintains good relationship with its supplies. It maintains efficient supply chain to have smooth operation and processes (Blogspot, 2013).
Threat of New Entrants
Threats of the new entrants are moderate to low in the Chinese Construction industry. This is mainly because the construction industry requires high capitalization cost. The company needs high quality and specialized equipment which are too expensive and difficult to arrange. New entrants have to compete with such big names in the industry, which are way too difficult. The development of strong brand name, marketing and promotional techniques requires a lot of time and funds. Moreover, it will be difficult for the company to have efficient supply chain networks. The new entrants have to follow the strict rules and regulations set by the government (Halak, and Reinke, 2011).
Threat from the Substitute Products
The threat of the substitutes is low in the Chinese construction equipment is low. This is mainly because of the specialized machinery produced in the country. The substitutes are available in human labour, however, heavy capital and plenty of time is required for performing the functions. There is no such alternative equipment which can perform the same operations as the construction equipment. CCCCLtd is one of the leading companies in the industry and working on all the areas and strategies that can be substituted. The only threat it has of losing consumers to the rival companies for least prices (Halak, and Reinke, 2011).
Rivalry of Existing Players
The construction industry in China is highly competitive. Some of the major competitors of China Communication Construction Company are APL, MCC, CNYD, etc. The company is leading the market, but still have to face tough competition from domestic and international construction companies. There are many customers who prefer the services in lowest possible prices. This may attract them towards competitors. It is necessary for CCCC ltd to have efficient pricing strategies. The company has also set its quality bar with the help of effective and efficient equipment and procedures (Owler, 2019).
References
Blog spot, 2013. Porter five forces of construction. [Online], Available at: http://tryfinakgokong.blogspot.com/2013/02/porters-5-forces-applied-to.html, [Accessed on: 30th December, 2019].
CCCCLtd, 2019. About the company. [Online], Available at: http://en.ccccltd.cn/aboutcompany/introduction/, [Accessed on: 30th December, 2019].
Halak and Reinke, 2011. Internationalization of Chinese Construction Equipment Firms. [Online], Available at: file:///C:/Users/CC/Dropbox/Business%20Law/FULLTEXT01.pdf, [Accessed on: 30th December, 2019].
Owler, 2019. CCCC’s Competitors, Revenue, Number of Employees, Funding and Acquisitions. [Online], Available at: https://www.owler.com/company/ccccltd, [Accessed on: 30th December, 2019].