International Expansion Decision for Construction Companies

Abstract

There exist several reasons for construction firms to expand their business into international markets. But the complex international environment is affected by diverse factors and creates risks that are not well understood by companies that are active mostly in domestic markets. It is therefore essential for construction companies to follow a disciplined and well-informed strategy when deciding whether to enter international markets. Company strengths relative to conducting business in international markets, the threats and opportunities associated with overseas work, and the costs and benefits of undertaking construction projects in specific countries need to be considered in this decision. The interactions between the complex factors can be structured in a model that can help one to make a rational judgment. The International Expansion Decision Model developed in this study is based on the Analytic Hierarchy Process (AHP) improved by the addition of a Delphi survey. The main objective of this research study is to facilitate the entry decision into foreign markets and to highlight the importance of the factors involved in this decision. This study is of relevance to practitioners as it allows executives of construction companies to test if their company is ready for expansion into international markets in general and into a specific country in particular. It is also of relevance to researchers as it demonstrates the successful use of the combined Delphi and AHP methods.