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Low profitability of the industry, Arabtec is well positioned. The PMT decide to diversify the business with different products (oil and gas,
power, infrastructure, affordable housing) and different geographical areas (India, North Africa)
Alessandro Rinaldi
Porter’s Five Forces of Competitive Position Arabtec Construction L.L.C.
Competitive Rivalry: Strong
Excess capacity-- fall in demand
Competitive tender to win a contract
Lowest fees to win the contract
Similar construction products
Overcrowded market
Bargaining Power of Supplier: Weak
Backward integration into the business of
suppliers
Construction materials available from many suppliers
Switching costs are low
Threat of Substitute Products or Services: Strong
New methods and processes
New methods cost less than traditional ones
Low switching costs: new project= new consultants
Bargaining Power of Buyers: Strong
Clients adopt a information
technology system for decision
making
Clients can postpone projects
Threat of New Entrants: Weak
No loyalty, the lowest bid wins
Low switching costs: new project = new consultants and suppliers
High Capital requirement
High risk of fail the target (time, cost, scope)
Difficulties to have skilled workers
