A Comparative Study of Globalisation and Specialisation of Global Leading

Companies

Abstract
Today’s global construction companies are battling in competitive market
environments. This thesis examines competitive strategies of the global leading
construction companies in order to suggest some policy implications for a
construction company striving to obtain competitive advantages. For this
research, Engineering News Record (ENR) top 225 contractors for the past 4 years
was analysed, which is one of the most reliable and accessible sources in
identifying the strategic direction of a company. To analyse the strategic
direction of a company in this research, two classifications were adopted;
globalisation (this is when more than 50% of the total revenue comes from
international market revenue) vs. localisation (when more than 50% of the total
revenue comes from local market revenue) and specialisation (when a company is
narrowly focused in only working in one or some market area such as only
buildings, or only manufacturing etc.) vs. generalisation (when a company is
focused more on different types of market place.) Accordingly,, this research
analyses the weight of globalisation and specialisation of the 225 companies. To
draw some valid conclusions, a series of rigorous statistical hypothesis tests
were undertaken. These research findings are meaningful in terms of being
utilised as a valuable framework for a construction company to steer its
strategic direction to gain competitive advantages in the future.

Table of Contents
1

Introduction....................................................................
.........................
1.1

Background......................................................................
................................. 1.2

Objectives......................................................................
.................................... 1.3

Scope...........................................................................
.......................................
1.4

Structure.......................................................................
......................................
2 Literature
Review..........................................................................
..........
2.1 Globalisation and
Localisation....................................................................
.....
2.1.1 What is
globalisation...................................................................
.........
2.1.2

Globalism.......................................................................
......................
2.1.3 What is
localisation....................................................................
.........
2.1.4 Organising for globalisation and
localisation......................................
2.2 Competitive
positioning……...................................................................
........
2.3 Integrated activities on global
scales..............................................................
2.4 Specialisation and
Generalisation..................................................................
..

3 Research
Methodology.....................................................................
........
3.1 Research
approach........................................................................
....................
3.2 Research
strategy........................................................................
.......................
3.3 Research
objectives......................................................................
....................
3.4 Research
analysis........................................................................
......................
3.4.1 Measuring
globalisation...................................................................
......
3.4.2 Measuring
specialisation..................................................................
......
3.4.3

Regrouping......................................................................
.......................
 3.4.4 Hypothesis
test............................................................................
...........
3.4.5 Type I and type II
errors........................................................................
3.4.6 One tailed and two tailed
tests...........................................................
3.4.7 Performing a
test............................................................................
........
3.4.8 Statistical interferences about two
populations.......................................

4 Empirical Findings and

Analysis............................................................
4.1 Analysis based on 225
Companies...............................................................
4.2 Analysis based on a particular
group...............................................................
4.3 Analysis based on the annual
data................................................................
4.4 Hypothesis
Test............................................................................
.................
4.4.1 Case
1...............................................................................
...................
4.4.2 Case
2...............................................................................
....................
4.4.3 Case
3...............................................................................
......................
4.4.4 Case
4...............................................................................
....................

5 Concluding Discussions………………………………………………
5.1 General conclusion……………………………………………………...........
5.1.1 Observation result……………………………………………………..
5.1.2 Rigorous statistical hypothesis test result……………………………
5.1.3 Box plot distribution result…………………………………................
5.2 Strategic conclusions……………………………………………………….......
5.2.1 Limitations………………………………………………………….......

References......................................................................
......................
1. Introduction
This chapter is intended to introduce the background of the role of construction
industries in general and why analysing engineering construction firm
competitive behaviour and competitive strategies is such an important issue. The
background of the research, the objectives and scope of this thesis are
presented in this chapter. At the end of the chapter the disposition of the
thesis is presented.
1.1 Background
Today’s global construction companies are battling in competitive market
environments. Recent years have witnessed a growing intensity of competition in
virtually all areas of business, whether at home or abroad, in markets upstream
for way????? materials, components, supplies, capital and technology, as well as
in markets downstream for consumer goods and services. This has resulted in
greater attention to analysing competitive behaviour and competitive strategies
under different environmental conditions. The primary emphasis has been on
examining the link between strategy, environment and performance in an effort to
achieve a position of competitive advantage (Yamin et al., 1999).

Ofori raised the issue regarding the importance of construction in national

development, such that the construction industry is an important sector of the
economy which makes a significant contribution to gross domestic product (GDP),
capital formation and employment, and has backward and forward linkage effects
with several other sectors.
The industry also contributes to capital formation and, hence, its products
represent a significant proportion of each nation’s savings. As it produces the
nation’s physical infrastructure and other productive assets, the industry is of
critical importance to the national development of developing countries. In most
developing countries, the construction industry has failed to play its expected
role of providing the basis for socio-economic development and securing
improvements in the living conditions of the citizens. Therefore, backlogs of
construction needs continue to accumulate. The industry has not been ‘the engine
of growth’ that it is widely considered to be by stimulating activities in other
sectors of the economy.
According to Ofori, construction should also create job opportunities, reduce
costs, and improve quality to contribute towards making the country an
attractive place for foreign direct investment (FDI). Its companies should
compete with foreign firms entering the markets in an era of globalisation.
The global construction market continues to boom and large international
contractors are reaping the benefits of the demand for big-ticket projects, from
petroleum production facilities and power plants to major infrastructure
upgrades; and signature building has made the demand intense for world class
contractors with the size and expertise to deliver these projects. As a result,
big firms around the world are scrambling to grow, either organically or through
acquisition, to meet this demand (Peter, 2008).
The higher the levels of innovation in the construction industry lead to, the
greater the likelihood that it will increase its contribution to economic
growth. Unfortunately, in most countries there is a perception that the industry
is not generally innovative, and that there is much room for improvement.
Government reports commissioned in recent years have identified such problems as
poor rates of investment in research and development (R&D), fragmented supply
chains, and lack of coordination between academia and industry in research
activities (Dulaimi et al., 2002). These are not simply issues of relevance to
public policy makers; industry participants need to review their capacity to
innovate.
“At the bottom line, engineering and construction firms need to innovate to win
projects and to improve the financial results of these projects. They must
innovate to compete. Development and effective use of new technology can provide
important competitive advantages for engineering and construction firms. These
advantages stem from distinctive technical capability, improvements in
operations, and image as a technically progressive company.” - Tatum (1991,
447).

Few firms in the construction industry have the resources or incentives to

maintain a formal research and development programme. This indicates the
importance of effective implementation processes to enable firms to adopt
successfully innovations developed elsewhere. It has been shown that this
involves, in part, absorptive capacity, champions, culture, knowledge
codification, innovation brokers, and relationships with manufacturers.
Effective innovation performance at the firm level requires combining elements
such as these into a formal innovation strategy. The final form of the strategy
will be a function of the quantity and quality of organisational capabilities
(Walker et al., 2003).
1.2 Objectives
The objectives of this thesis are:
(1) To identify the weight of globalisation and specialisation percentage of the
225 global leading companies
(2) To identify the strategies that construction firms use to gain competitive
positions in international markets
(3) To analyse the nature of these strategies to sustain construction firms’
competitive positions in international markets
It is important in this research to identify the critical factors of successful
globalisation and specialisation strategy through observing the 225 leading
companies by using the Engineering News Record (ENR) as a reference tool.
1.3 Scope
A study of a management’s issues in construction is generally categorised into
three types: such as industry, firm, and project (Charles et al., 2004).
Traditionally, most research efforts and attention are placed at the project
level. More recently, Kale and Arditi (2002), correctly pointed out that
empirical research approaches to validate or refute hypotheses are lacking in
the research of competitive positioning of construction organisations.
The results allow for the development of generalisations regarding strategic
approaches of construction firms to gain a competitive advantage and sustain
these positions in international markets.
According to Moavenzadeh (2006), the Engineering and Construction industry is
concerned with two sets of issues:
* How demand for its output is generated and affected by modern societies
* How a supply system is shaped to cope with changing demand
The construction industry is currently in a state of transition. Forces from
both the demand, as well as the supply side, have made it necessary to re-
examine the strategies for growth and competitiveness (Moavenzadeh, 2006).
This thesis focuses on the strategic choice perspective of the leading companies
based on ENR’s top 225 and Australian construction firms.
We need to aim to identify the strategic pattern of each company to identify its
globalisation and specialisation pattern to achieve the representative model
which is shown below;
Figure 1.1: Globalisation and specialisation section category (Budisetia and
Han, 2009)
From figure 1.1, we could interpret that there is four regions of model that
represents each characteristic of the company.
> Region I – represents the specialisation and globalisation
> Region II – represents the specialisation and localisation
> Region III – represents the generalisation and localisation
> Region IV – represents the generalisation and globalisation
The division of how the percentage of globalisation and specialisation is
distributed is also showed in the diagram.

1.4 Structure
This thesis is organised into 6 sections, and conducted as the figures show
below.

Figure 1.2: Outline of the thesis (Budisetia, 2009)

2. Literature Review
In this chapter the theoretical framework of the management issues of study will
be discussed. This chapter focuses specifically on globalisation, localisation,
specialisation, generalisation and competitiveness issues of a construction
firms. The first part of the literature review will discuss what globalisation
is and how it can challenge firms. The second part of this literature review
will discuss the competitive index which identifies the competitive positioning
and continuity of construction firms in international markets. Finally, this
chapter will focus on the specialisation issue of industrial firms.
2.1 Globalisation and Localisation
Two seemingly competing tendencies, the globalisation and the localisation of
industries, have captured the interest of scholars, economic development
professionals, and policymakers in recent years. While trends towards
globalisation of industries and companies appear to reduce the importance and
distinctiveness of (sub-national) regions, a tendency towards localisation of
certain industries and economic activities appears to do exactly the opposite
(Enright et al., 1998).

In the first part of the literature review, we will introduce the terms of
globalisation and localisation, and distinguish the difference between these two
terms. Referring to our research;
? Globalisation
When more than 50% of the total revenue comes from international
market revenue
? Localisation
When more than 50% of the total revenue comes from local market
revenue
2.1.1 What is globalisation
Korkmaz & Messner (2008) stated that globalisation has largely been due to
worldwide economic development, increases in communication technology, and the
opening of many domestic markets to foreign firms. New economic development and
changes in political policies (e.g., free trade agreements) make it easier for
firms to enter international markets, often through strategic alliances with, or
acquisitions of, firms currently operating these domestic markets (Hitt et al.,
1998). These developments have opened new markets and opportunities for
worldwide firms. Globalisation, however, challenges firms since they must now
compete within an ever changing and expanded marketplace.
According to Russell, globalisation is a term that can refer to everything from
an interconnectedness of experience to the rise in international ventures. For
the design and construction industry, however, globalisation is a trend that
means two things: increased opportunity and increased competition.
Russell also stated that size and location are important but are definitely not
the only variables. Speciality services, market position, corporate culture, and
a willingness to accept and manage change will all have a bearing on a company’s
ability in the globalised future. Engineers must embrace globalisation as the
new reality or risk losing their place in the economy of the future.
On the other hand, Kallman (2009) suggests that the quest and need for
innovation have become ever more evident in today’s corporate world. Western
companies in particular are facing high competition due to the continuous
globalisation of the world. This calls for a higher focus on making innovation
more comprehensive and, hence, more tacit throughout the competitive
organisation.
2.1.2 Globalism

(REFERENCE)
“The World is flat” by Thomas Friedman
Business competitiveness has now evolved to a level of sophistication that many
term globalisms (through more commonly called globalisation). Global competition
characterised by networks of international linkages bind countries,
institutions, and people in an interdependent global economy. The invincible
hand of global competition is being propelled by the phenomenon of an
increasingly borderless world, by technological advancements, and by the rise of
developing economies such as China and India (a process that Thomas Friedman
refers to as “levelling the playing field” among countries) or the “flattening
of the world.”
Globalisation has led to the narrowing of differences in regional output growth
rates as economic activity increased, driven largely by increases led by China,
India, and Russia (China’s growth, 10.7 percent in 2006, continues its
escalation into 2007). It is clear that world trade is phenomenal and growing
and, importantly, is increasingly including the developing nations. However
there are important aspects of globalism other than economic factors, though
these aspects are intertwined.
“In today’s economic system, no market is isolated from the global markets.
Globalisation brings new opportunities to construction companies. However for
companies that consider international work, these markets also entail many
risks... To survive and prosper in global economic system, construction
companies need to develop special strategies.” - (Gunhan and Arditi, 2005).

Therefore, there exist several reasons for construction firms to expand their
businesses into international markets, and according to Gunhan and Arditi, these
reasons include stagnant domestic markets, spreading risk through
diversification into new markets, competitive use of resources, and taking
advantage of the opportunities offered by the global economy.
2.1.3 What is localisation
According to Hoenig, localisation is defined as a company that operates in a
number of countries, adjusting products and practices in each - at a high
relative cost, with a committed operating presence in the markets of other
nations.
Advocates of the localization strategy point out that, since few markets are
exactly alike, some adaptation to local needs is necessary to win buyers and
maximise sales (Ramarapu et al., 1999).
(Wind, 1998) has identified three reasons not to become global:
1. Standardised products are over-designed for some countries and under designed
for others.
2. Company networks that already exist may be undermined, and
3. Standardisations dampens entrepreneurial spirit
Hoenig also stated that localisation allows for:
* Winning specific buyers and maximising sales
* Not over-designing products for some countries and under designing them for
others
* Not undermining some company networks which already exist
* Not dampening entrepreneurial spirit
The level of competition one paces????? can decidedly affect the choice between
standardisation and localisation. A company that has no direct competition in a
country can more easily standardised its product. However presence of direct
competition tends to orient the company to localisation as a basis for
competitive advantage (Ramarapu et al., 1999).
2.1.4 Organising for globalisation and localisation
This chapter is a summary from ( ) which explains how to organise
globalisation and specialisation firms.
No matter what the stage of internationalisation, a firm’s structural choices
always involve two opposing forces: the need for differentiation (focusing on
and specialising in specific markets) and the need for integration (coordinating
those same markets). The way the firm is organised along the differentiation-
integration continuum determines how well strategies along a localisation and
globalisation continuum are implemented.
This is why the structural imperatives of various strategies such as
globalisation must be understood to organise appropriate worldwide systems and
connections.
As previously presented, global trends and competitive forces have put
increasing pressure on multinational corporations to adopt a strategy of
globalisation, a specific strategy that treats the world as one market by using
a standardised approach to products and markets.
Organising to facilitate a globalisation strategy typically involves
rationalisation and development of strategic alliances. To achieve
rationalisation, managers choose the manufacturing location for each product
based on where the best combination of cost, quality and technology can be
attained. It often involves producing different products or component parts in
different countries. Typically, it also means that the product design and
marketing programs are essentially the same for all end markets around the world
to achieve optimal economies of scale. The downside of this strategy is a lack
of differentiation and specialisation for local markets.
Organising for global product standardisation necessitates close coordination
among the various countries involved. It also requires centralised global
product responsibility (one manager at headquarters responsible for a specific
product around the world), an especially difficult task for multi product
companies. Henzler and Rall suggest that structural solutions to this problem
can be found if companies rethink the roles of their headquarters and their
national subsidiaries. Managers should centre the overall control of the
business at headquarters, while treating national subsidiaries as partners in
managing the business- perhaps as holding companies responsible for the
administration and coordination of cross-divisional activities.
A problem many companies face in the future is that their structurally
sophisticated global networks, built to secure cost advantages, leave them
exposed to the risk of environmental volatility from all corners of the world.
Such companies must restructure their global operations to reduce the
environmental risk that results from multicounrty?????? sourcing supply
networks. In other words, the more links in the chain, the more chances for
things to go wrong. The overseas Chinese business network alliance which
minimises much risk is described in the accompanying Comparative Management in
Focus.
2.2 Competitive positioning
According to The Global Competitiveness Report (2008 – 2009), after several
years of rapid and almost unhampered growth, the global economic landscape is
changing. Rising food and energy prices, a major international financial crisis,
and the related slowdown in the world’s leading economies are confronting
policymakers with new economic management challenges. Today’s volatility
underscores the importance of a competitiveness supporting economic environment
that can help national economies to weather these types of shocks in order to
ensure solid economic performance going into the future.
A nation’s level of competitiveness reflects the extent to which it is able to
provide rising prosperity for its citizens.
Global Competitiveness reports have examined the many factors enabling national
economies to achieve sustained economic growth and long term prosperity. The
Global Competitive Index (GCI) defines competitiveness as the set institutions,
policies, and factors that determine the level of productivity of a country.
The level of productivity, in turn, sets the sustainable level of prosperity
that can be earned by an economy. In other words, more competitive economies
tend to be able to produce higher levels of income for their citizens. The
productivity level also determines the rates of return obtained by investments
in an economy. Because rates of return are the fundamental drivers of the growth
rates of the economy, a more competitive economy is one that is likely to grow
faster over the medium to long term.
The concept of competitiveness thus involves static and dynamic components:
although the productivity of a country clearly determines its ability to sustain
a high level of income, it is also one of the central determinants of the return
to investment, which is one of the key factors explaining an economy’s growth
potential (The Global Competitiveness Report, 2008 – 2009).
The Global Competitiveness Report stated that there are 12 pillars of
competitiveness with the many and complex determinants of competitiveness. The
12 pillars are:
1) Institutions
2) Infrastructure
3) Macroeconomic stability
4) Health and Primary education
5) Higher education and training
6) Good market efficiency
7) Labour market efficiency
8) Financial Market sophistication
9) Technological readiness
10) Market size
11) Business sophistication
12) Innovation
Korkmaz and Messner (2008) stated that competition, being at the core of the
success or failure of firms, determines the appropriateness of a firm’s
activities that can contribute to its performance, such as innovations, a
cohesive culture or good implementation. A competitive positioning within an
industry attracts attention as a key determinant of a firm’s profitability.
Porter (1980, 1985) proposed generic typologies as a function of each firm’s
success in achieving a competitive advantage within a particular industry, so
they can place themselves in a more advantageous position compared with rivals.
The competitive positioning and relationship of the firm to its environment
promise its continued success and make it secure from the environment‘s
surprises. A company has a competitive advantage whenever it has an edge over
rivals in attracting customers???? and defending itself against competitive
forces.
Kozmaz and Messner (2008) also mentioned that dozens of variables and thousands
of their combinations can define competitive space, i.e., the industry setting
in which a firm operates. These variables and combinations of variables can
potentially influence a firm’s positioning. Therefore, sustaining a competitive
position, as well as the initial creation of position, presents a great
challenge. Competitive advantage cannot be continued for a long time without
changes in products, services, and strategies. Markets change quickly and
competitors seek to intimate successful products, services, and strategies. The
most successful firms innovate and continually seek new forms of advantage to
develop a competitive gap and maintain their lead.
In terms of theories of competitive positioning, Kozmaz and Messner (2008)
applied that the debates on competitive positioning can be addressed in the
light of two perceptions in organisational studies literature: environmental
determinism and strategic choice perspectives.
(a) Environmental Determinism
Environmental determinism argues that the environment is the primary mechanism
for explaining the performance of an organisation. Therefore, strategic leaders
have limited effect on the performance of an organisation.
(b) Strategic Choice Perspective
Strategic choice perspective states that organisations are capable of responding
to environmental threats and opportunities by adopting alternative strategic
choices, guided by the decisions of strategic leaders whose job is to enhance
performance.
In this strategic choice perspective, Kozmaz and Messner (2008) adopted the idea
such that Porter’s generic strategies (1980) that consist of cost leadership,
differentiation, and focus can be identified as one of the most referenced
strategy classifications and proposes that these strategies were adapted to the
construction industry.
Warzawski (1996) proposes that construction firms can:
(1). Achieve a cost leadership strategy by standardisation of products, training
of personnel, careful selection of suppliers, tight control, technological
advance, and incentive programs.
(2). Realise a differentiation strategy by a higher standard of product, higher
quality of product, faster project completion, and more extensive service to
clients, and
(3). Obtain a focus strategy by focusing on certain types of project, certain
geographical areas, or certain types of clients.

Mode and scope of competition, illustrated in figure ( ), are unifying

concepts for strategic choice perspective classifications in the context of the
construction industry.

(PICTURE)

(c) Integrating Perspective

Recent research shows that it is not one or the other perspective but, instead,
the integrated effects of both environmental factors and the strategic choice
perspectives which lead firms to a competitive advance within their industries.
Porter (1990) brings a different dimension to these discussions and states that
“competitive advantage of nations” explains why certain industries succeed
within a nation while others do not. According to his paradigm, the home base
plays a critical role in the potential success of strategy since a firm tends to
gain competitive advantage in industries for which the local environment is
dynamic and challenging.

One of the conditions for firms to operate successfully overseas is that they
must possess competitive advantages in order to outperform domestic and other
foreign contractors (Gunhan and Artiti, 2005).
2.3 Specialisation and generalisation
In this part of the literature review, we will introduce the terms of
specialisation and generalisation, and distinguish the difference between these
two terms. Referring to our research;
? Specialisation
When a company is narrowly focused in only working in one or some market area
such as only buildings, or only manufacturing etc.
? Generalisation
When a company is focused more on different types of market place.

The idea that specialisation is not neutral for growth has deep roots in the
history of economic thought. According to Verspagen (1999), theoretically, the
relationship among specialisation, structural change and economic growth takes
two forms.
Firstly, by opening possibilities for an increased specialisation, it leads to
higher productivity growth in the form of learning. In this argument, the
emphasis is not so much on what an economy specialises in, but rather whether it
specialises independently of the nature of the specialisation. This argument is
present in both the New Theory Growth (Aghion & Howitt, 1992; Grossman &
Helpman, 1994; Lucas, 1988; Romer, 1990, 1994) and the Postkaldorian export-led
Theory (Mc Combie & Thirwall, 1994).
Secondly, some activities might provide bigger growth opportunities than others
and, consequently, it is important in which activities the economy is
specialised. The reasons for this might be in supply-side factors (e.g.
differential technological opportunities between activities) or in demand-side
factors (e.g. differential income elasticities between productive sectors). This
argument is present in Evolutionary Theory (Nelson & Winter, 1982; Dossi, Pavitt
& Soete, 1990; Lundvall, 1992; Verspagen, 2002) in which the growth of the
productivity is subject to the improvements in the economic system, as product
quality and R&D efforts.
The link between specialisation and income distribution has been rarely studied,
but has been the object of recent researches. The distribution of income has an
important impact on demand patterns, as different income groups have different
structures of demand.
Following this idea, Mani & Hwang (2004) argue that countries facing high
inequality (absence of a middle class) present a market demand spread and more
thinly, but over a wider range of sectors of low, medium, and high levels of
sophistication. As international competitiveness is assumed to develop as an
extension of production for the home-market in a process of cumulative learning,
the potential for a learning process in the production of high-tech goods is
rather limited in societies with high inequality.
This turns into a restriction on the development of skills, returns [?] to skill
and economic growth. The transition to a stage featured by exports with high
technological content and higher per capita income is thus endogenously limited,
in a process in which an initial inequality can depress human capital
accumulation and retard growth in a manner that is self perpetuating (Mani,
2000). Zweimüller (2000) argues in a similar way: when income is highly
concentrated, the potential market for a new product is rather small and it
takes a long time until mass consumption is possible. The expected returns to
innovations are low, which retards technical progress and productivity growth.
When wealth inequality is considered (land ownership, for instance), the path of
development may shift from a situation in which high income-inequality fuels
growth, to another in which it restrains growth.
The qualitative change in the role of land in the process of industrialisation
brought about changes in the ranking of economies in the world income
distribution.
Therefore, it is also possible to argue that the impact of the structure of
demand on growth occurs not only at the national level, but also
internationally. Income distribution affects the way in which countries
specialise and in which technical progress and productivity can advance.
Furthermore, an unequal world economy may show lower growth rates than an equal
one. A link between the presented approach and the idea of clubs [?] of
convergence developed by Quah (1993 a, b, 1996) seems attractive.

3. Research Methodology
In the previous chapter, the justification for the research project was outlined
in terms of the current literature on knowledge management. The intent of this
chapter is to explain and justify how I conducted this research and which
strategy, methods and approach will be described and discussed. Data collecting
and analysing proceeded ???????????? will follow.
3.1 Research approach
The research methodology of a scientific approach is a science of studying how
research is done scientifically. This type of approach is a way to
systematically solve the research problem by logically adopting various steps.
Methodology helps to understand not only the products of scientific inquiry but
the process itself. It also aims to describe and analyse method, throw light on
their limitations and resources, clarify their presuppositions and consequences,
relating their potentialities to the twilight zone at the ‘frontiers of
knowledge’
(Shava, 2005).

The scientific approach in this thesis is deductive, since I initially studied

established theories and facts. With help from the collected theories and facts,
decisions for the empirical data needed could be carried out. Furthermore, the
content of the chosen theories is used for analysis of the empirical data in
order to help us answer our research questions.
3.2 Research strategy
An empirical research method is used in this thesis.
“Empirical Research is research that is based on experimentation or observation,
i.e. Evidence. Such research is often conducted to answer a specific question
or to test a hypothesis (educated guess).” (Basileiad, 2006)

In this type of research, we need to start exploring the project context and
formulate the research framework. According to (Basileiad, 2006):
Objectives of the Research Process are to:
* Capture contextual data and complexity
* Learn from the collective experience of the field
* Identify, explore, confirm & advance theoretical concepts
* Enhance educational design
Aims of the Empirical Research Process are:
* Move research beyond simple ‘reporting of observations’
* Foster environments for enhanced understanding
* Combine rigorous research with thorough case study
* Relevance of theory is proved by ability to work in a real world environment
(context)
Why use Empirical Research Methods?:
Tradition and assumed knowledge (i.e. superstition) have been relied upon for
too long
* Integrate research and practice
* Instructional science (i.e. the education process) needs to progress.
The benefits from Empirical Research Methodology:
* Integrate professional knowledge with empirical data to inform instructional
developmental decisions
* Teaching methods and student learning are backed by quality data and
educational theory
* Results reflect or support theory and demonstrate relevance to context
* Established relationship between intervention & behavioural response
As it is stated in the introduction, the objectives of this research aim to
identify the weight of globalisation and specialisation percentage of the 225
global leading companies; therefore we need to do some empirical research based
on experiment or observation.
3.3 Research objectives
There are three research questions that arise from this topic;

Figure 3.1: Research objectives (Budisetia, 2009)

3.4 Research analysis

The empirical data collection was based on the annual Engineering News Record
(ENR) top 225 companies for the past four years from 2005 to 2008. First of all,
we need to analyse these four years data and calculate the globalisation and
specialisation percentage based on the global revenue of each company.
3.4.1 Measuring globalisation
Globalisation rate could be found using the International revenue divided by the
total revenue and multiplied by 100% shown in the Equation 1 bellow.

(1)

In this case we could find out the globalisation percentage in that year of each
of the 225 companies.
Once we obtain the globalisation rate, which ranges from 0% to 100%, we find
that:
* 0-50 % is defined as localised companies
* 51-100% is defined as globalised companies

Figure 3.2: Globalisation percentage (Budisetia and Han, 2009)

3.4.2 Measuring specialisation

In the following stage, after several discussions with my supervisor, we
developed the following equation to measure the specialisation rate of each
company.

(2)

Specialisation Index is the weight of specialisation of each company based on 9

different types of market areas, which is represented by ‘ni’.
Which,
n1 – general building market based on percentage of global revenue
n2 – manufacturing market based on percentage of global revenue
n3 – power market based on percentage of global revenue
n4 – water supply market based on percentage of global revenue
n5 – sewer/waste market based on percentage of global revenue
n6 – industry / petroleum market based on percentage of global revenue
n7 – transportation market based on percentage of global revenue
n8 – hazard waste market based on percentage of global revenue
n9 – telecommunication market based on percentage of global revenue
Note that:
* The specialisation index is a range between 0 and 988.
* When we sum n1 to n9, we should get a value between 0- 100%.
Therefore when a company is much specialised, such that it is only focused in
one market area and not focused on any other areas at all, the specialisation
index should be 988. Hence, the specialisation rate is 100%.
On the other hand, when a company is equally generalised, the “ni”term of each
market area should be about % or 11.1% and we should get a specialisation index
about 0. As a result the specialisation rate becomes 0%.
From the above explanation, we can conclude that;

Figure 3.3: Specialisation rate (Budisetia and Han, 2009)

Such that;
* 0 – 50% is defined as a generalised company
* 51 – 100% is defined as a specialised company

3.4.3 Regrouping

After we achieve the globalisation and specialisation rate of each 225 company,
we need to divide these companies into 7 smaller groups, based on their global
rankings, in order to analyse how each group is focused on its market,
internationally and generally. The division of the groups are as follows;
* Group A --> 1-30
* Group B --> 31-60
* Group C --> 61-90
* Group D --> 91-120
* Group E --> 121-150
* Group F --> 151-180
* Group G --> 181-225
Group A represents the top 30 leading companies amongst the global contractors
and we are going to focus further on this group as we analyse the average
globalisation and specialisation.
3.4.4 Hypothesis test
In order to conduct this empirical research, we need to perform four hypothesis
tests. A hypothesis basically is a hunch, an assumption, a proposion, a guess
which is tentative, provisional and explains the situation under observation yet
to be proved or disproved
According to (Warpole, 1974), a statistical hypothesis is an assumption or
statement about one or more populations, which may or may not be true. We obtain
evidence from samples of the population to decide whether we will accept or
reject a hypothesis.
However, rejecting a hypothesis means that we decide that it is false, while
accepting only implies that we have insufficient information. Therefore we
commonly adopt the practice of using null hypothesis, Ho, which we hope to find
the evidence to reject. Rejecting the null hypothesis allows us to accept the
alternative hypothesis, which is the one that we were interested in ‘proving’.
Strictly speaking, in testing a hypothesis we don’t ‘prove’ anything. What we do
is show that it is unlikely that we would be seeing the evidence available if
the hypothesis was false. ‘Unlikely’ can vary in different studies. It is
commonly taken to be less than 5%.
Another warning needs to be made about doing many tests to test a large variety
of hypotheses on the same data. Each test has a probability of giving the
incorrect results, so performing more tests makes it even more likely of making
an error. In fact, if 59 false hypotheses are tested with ‘unlikely’ being 5%,
then it is ‘unlikely’ that they will all be rejected.
3.4.5 Type I and type II errors
When we make a decision about whether or not to reject a particular hypothesis
there are two types of errors that we could make. A type I error occurs when we
reject a null hypothesis that it is true. A type II error occurs when we accept
a null hypothesis that is false.
The probability of making a type I error is called the level of significance of
the test and commonly denoted by ?.
The probability of making a type II error is commonly denoted by ?. It is
impossible to determine without an alternative hypothesis to measure against.
For a fixed sample size a decrease in ? will lead to an increase in ? and vice
versa.

3.4.6 One tailed and two tailed tests

When we are trying to determine if one value is larger than another we have a
one tailed test. For example;
(3)

When we are trying to determine if the values are equal then we have a two
tailed test. For example;

(4)
The type of test selected depends upon the conclusion to be drawn if the null
hypothesis is rejected.
3.4.7 Performing a test

Performing a test involves selecting a critical region for a particular

statistic and the determining if the statistic lies within the region or not
(Sridhar).
The Procedure for hypothesis testing:
* Making a clear formal statement indicating use of one- tailed test or two-
tailed test
* Select significance level based on:
(i) The magnitude of the difference between sample means
(ii) The size of samples
(iii) The variability of measurements within samples
(iv) Whether hypothesis is directional or non- directional
* Deciding the appropriate sampling distribution to be used (normal or t-
distribution).
* Selecting a random sample and computing an appropriate value (draw a sample to
furnish empirical data)
* Calculation of the probability that sample result would diverge as widely as
expected in null hypothesis
* Comparing the probability with given significance level (? or ? )

The figure below explains a better process of hypothesis testing.

Figure 3.4: Flow diagram for hypothesis testing (Sridhar)
3.4.8 Statistical inferences about two populations
The hypothesis test we need to perform in this research is statistical inference
about two populations as we are trying to determine one population is larger
than another population, such that localisation vs. globalisation and
generalisation vs. specialisation.
Accordimg to Black et al. (2007), there are 5 types of statistical inferences
about two populations such that:
1. test hypotheses about and construct confidence intervals for the difference
in two population means using the z-statistic
2. test hypotheses about and confidence intervals for the difference in two
population means using the t-statistic
3. test hypotheses about and construct confidence intervals for the mean
difference in two related populations
4. test hypotheses about and construct confidence intervals for the difference
in two population proportions
5. test hypotheses about twi?????? population variances
The method we going to use in this research is type one which is hypotheses
testing and confidence intervals for the difference in two means using the z
statistic (population variances known).
In some research designs, the sampling plans calls for selecting two independent
samples, calculating the sample means and using the difference in the two sample
means to estimate, or test, the difference in the two population means.
The object might be to determine whether the two samples come from the same
population or, if they come from different populations, to determine the amount
of difference in the populations.
In order to analyse the difference in two samples by using sample means, the
central limit theorm states that the difference in two sample means,
X and Y, is normally distributed for large sample sizes (both n and m ? 30)
regradless of the shape of the populations.
The expressions lead to a z formula for the difference in two mean sample means.

(5)
where:
= the mean of population 1
= the mean of population 2
n = size of sample 1
m = size of sample 2
For the hypotheses testing, we are going to use one tailed test such that:
(6)

4. Empirical Findingsand Analysis

In this chapter, the empirical findings gathered to answer our research problems
are analysed. Furthermore, our findings are identified and discussed based on
the theoretical framework. The chapter contains our analysis of the findings of
the weight of globalisation and specialisation of the 225 top construction
companies and the analysis of the statistical interference hypotheses and box
plot distributions result.

This chapter will be divided into five sections, firstly we focus on

globalisation and specialisation of the whole 225 companies. Then in the second
section we focus on smaller groups of rank of all the companies. The third
section is an analysis of the annually globalisation and specialisation rate and
at the fourth section, we will perform the hypothesis test and box plot
distribution; and lastly some conclusions will be made based on the observation
of the top group and compare them with Australian companies.
4.1 Analysis based on 225 companies.
In this section, we will discuss the results of our observation based on the
analysis of the top 225 global contractors, which are shown in Figure 4.1.
The figures showed the 225 top global construction companies graphed based on
the 2008 globalisation and specialisation percentage. From this graph, we could
observe the weight of these 225 companies and observed the behaviour of the
globalisation vs. localisation and specialisation vs. generalisation.
From the observation, we could conclude that 177 companies have a globalisation
percentage less than equal to 50% which is classified as localised and only 48
companies have a globalisation percentage above 50%, which is classified as
globalised.
Moreover, from observations, 115 companies have a specialisation percentage less
than equal to 50% and 110 companies have a specialisation percentage more than
50%. In this case we could conclude that the specialisation rate of the 225
companies is roughly equal in this particular year.
Figure 4.1: 2008 Globalisation vs. Specialisation (Budisetia, 2009)
The rest of the globalisation versus specialisation graphs of 2005 to 2007 are
shown in Appendix B.

4.2 Analysis based on particular group

In this section, we analyse the pattern of globalisation and specialisation
based on the grouping of the rank as it was explained in chapter 3. The results
are tabulated in table below.
2005Ranking GroupsAverage Globalisation (%)Average Specialisation (%)A [1-
30]3535B [31-60]2139C [61-90]2752D [91-120]2358E [121-150]2047F[151-
180]2467G[181-225]1367
2006A [1-30]3540B [31-60]2641C [61-90]2256D [91-120]3450E [121-150]1561F[151-
180]1966G[181-225]1368
2007A [1-30]3635B [31-60]3040C [61-90]1962D [91-120]3244E [121-150]2362F[151-
180]1473G[181-225]1671
2008A [1-30]4038B [31-60]2944C [61-90]3652D [91-120]2358E [121-150]2154F[151-
180]2469G[181-225]1670
Table 4.1: Globalisation and Specialisation percentage based on the grouping
(Budisetia, 2009)

The table above shows how each group performs annually. We also can focus on
each individual group and observe the movement of each group year by year. From
the table, we could observe that the average globalisation and specialisation
percentage of each group is actually not constant and some of it is increasing
and some of it is actually decreasing annually. For a further observation, we
could have a look at the graph below which represents the movement of all groups
in the 225 companies annually.
From the graph, we could see clearly the movement of each group annually. For
example, if we look at the top group (Group A), we could define that the
globalisation rate is constant between 2005 and 2006 and slightly increasing by
each year after 2006. On the other hand, the specialisation is hard to conclude
based on four years data as it is not constant, it is slightly increasing, then
decreasing and increasing again.

Figure 4.2: Globalisation vs. Specialisation by groups annually (Budisetia,

2009)
Therefore based on the table and graph, we could not conclude that there is a
pattern of each individual group whether it is increasing or decreasing based on
the globalisation and specialisation percentage.
For further research, now we average the globalisation and specialisation rate,
we could get results as shown in the table below.
Groups Average Globalisation (%)Average Specialisation (%)A [1-30]3737B [31-
60]2741C [61-90]2656D [91-120]2852E [121-150]2056F[151-180]2069G[181-225]1469
Table 4.2: Globalisation and Specialisation average percentage based on the
grouping (Budisetia, 2009)

From Table 4.2, results of the four years average data, it is shown clearly that
the average globalisation rate is increasing as the group rank gets higher. On
the other hand, the average specialisation is decreasing as the group rank gets
higher.

Figure 4.3 shows the pattern of movement by each group categories more clearly
and it seems that as the groups get higher in rank, they move towards
globalisation and generalisation.

Figure 4.3: Globalisation vs. Specialisation percentage based on average ranking

groups (Budisetia, 2009)

1.3 Analysis based on the annual data

In this section, the data will be analysed annually and compared to the average
globalisation and specialisation percentage from 2005 to 2008. The result is
tabulated below.
Average Globalisation (%)Average Specialisation
(%)20052352200623552007245520082755
Table 4.3: Globalisation and Specialisation average percentage based on yearly
(Budisetia, 2009)
Based on the average globalisation and specialisation, it shows that the top 225
global construction companies get more globalised and specialised each year.
However the rate of these increases is not constant.

Figure 4.4: Globalisation vs. Specialisation percentage based on average

annually (Budisetia, 2009)

The movement of globalisation and specialisation rate annually can be seen more
clearly in the graph above. The year 2008 is moved towards globalisation and
specialisation if we compare it with the other three years data. However, from
all of the analysis we could not conclude clearly based on 4 years data. The
comparison also has been done by observation and therefore further analysis
needs to be done, such as hypothesis testing.
1.4 Hypothesis Test
In order to perform this empirical research, we are going to perform four
hypothesis tests based on the 2005 to 2008 global constructions data, where all
the methods have been described in the research methodology sections.
1.4.1 Case 1
Let X represent ‘localisation rankings’ and Y represent ‘globalisation rankings’
be the independent random variables based on 2008 global construction company
rank. We are interested in testing whether the distribution of localisation
rankings and globalisation rankings are the same or one is higher than the
other.
The hypotheses are:
H0 : µx = µy
H1 : µx> µy
The level of significance we are going to use is 0.05
The test we are going to perform is one tailed z test for two populations.

X (Localisation Ranks)
Y (Globalisation
Ranks)15711516220851592591161642091016336011716621011165462118167211151786631201
68212181867651211692141920486612217021522207968123171216232131269124172217261371
12517321827147212617421930167312717522039177412817622141207512917722244217613017
92234824771311802245125781321812255828801331826129811341836431821351846732831361
85703386137187793493138188843594139189853695140190873796141191883897142192894098
14319390421001461949143101147195924510214919699461031501971074710415219811049105
15319911150106154200119521081552011445310915620214554112157203148551131602051515
6114161206158n177m48119.3489.60Sx65.32Sy59.21Sx24267.33Sy23505.35
Table 4.4: 2008 Localisation and Globalisation rankings distribution (Budisetia,
2009)

The table above shows the rankings distribution of localisation and

globalisation companies based on observation. From Equation (5) in the previous
chapter, observed z-value could be calculated.
-
z=
? [(S2x / n) + (S2y / m)]

(119.34 – 89.60)
z = = 3.018
? [(4267.33 / 177) + (3505.35 / 48)]

At an approximate significance level of ? = 0.05, the critical region is z ? z

0.05 = 1.645.

Figure 4.5: Location of observed z-value for 2008 localisation vs. globalisation
(Budisetia, 2009)
Therefore, since the calculated value of the test statistic z = 3.018 > 1.645,
the null hypothesis is clearly rejected and conclude that µx> µy, such that the
average rankings of localisation is higher than the average rankings of
globalisation. As a result based on this hypothesis test, at 2008, global
leading companies have competitiveness on international market.
For a better illustration, two box plots were drawn as a pictorial
representation of the distribution of the set of data using matlab. Box 1
represents the localisation ranking distribution and Box 2 represents the
globalisation ranking distribution for 2008.

Figure 4.6: 2008 Localisation vs. Globalisation box plot (Budisetia, 2009)
5 Summary NumberBox 1 – Localisation RankingsBox 2 – Globalisation
RankingsMin15Q162.540Median12486Q3176.5144.5Max225213
Table 4.5: 2008 Localisation and Globalisation – 5 summary numbers (Budisetia,
2009)

Results of the observation are such that;

* Distributions of values in group 1 (Localisation) appear to be skewed to the
left and distribution of group 2 (Globalisation) appear to be skewed to the
right.
* There is no outliers observed from both groups
* The average level of group 2 (Globalisation) measurements is higher than for
group 1 (Localisation).
* The spread of both groups is similar with a suggestion that group 1
(Localisation) measurements are more variable.

1.4.2 Case 2
Let X represent ‘generalisation rankings’ and Y represent ‘specialisation
rankings’ be the independent random variables based on 2008 global construction
company rank. We are interested in testing whether the distribution of
generalisation rankings and specialisation rankings are the same or one is
higher than the other.
The hypotheses are:
H0 : µx = µy
H1 : µx< µy
The level of significance we going to use is 0.05
The test we are going to perform is one tailed z test for two populations.

X(Generalisation Rankings)
Y(Specialisation
Rankings)12752921341754711101541832112285393135178773112155186213329559413618487
41131561882145305796138185237911415718921563160971391872481117162190216932619914
21912683119164192217103362100143193398412116519621911346310114419441861231661972
21123566107145195468712416719822213366911114620149891261681992231437721151472125
19112816920015387511614921854951291712021640761181502205698130173203174277120158
22458102137174204184378122159591031401762051944801251606410414117720620458212716
16510514817920721478513116367106151180208224888132170681081521812092550901331727
0109153182210 n115 m110 92.27 134.67 Sx63.11 Sy60.13 Sx23982.43 Sy23
615.73
Table 4.6: 2008 Generalisation and Specialisation rankings distribution
(Budisetia, 2009)

The table above shows the ranking distribution of generalisation and

specialisation companies based on observation. From Equation (5) in the previous
chapter, observed z-value could be calculated.
-
z=
? [(S2x / n) + (S2y / m)]

(92.27 – 134.67)
z = = -5.161
? [(3982.43/ 115) + (3615.73/ 110)]

At an approximate significance level of ? = 0.05, the critical region is z ? -z

0.05 = -1.645.

Figure 4.7: Location of observed z-value for 2008 generalisation vs.

specialisation (Budisetia, 2009)
Therefore, since the calculated value of the test statistic z = -5.161 < -1.645,
the null hypothesis is clearly rejected and conclude that µx< µy, such that the
average rankings of generalisation is less than the average rankings of
specialisation. As a result, based on this hypothesis test, it seems that at
2008, global leading companies have competitiveness in several product areas.
For a better illustration, two box plots were drawn as a pictorial
representation of the distribution of the set of data using matlab. Box 1
represents the generalisation ranking distribution and Box 2 represents the
specialisation ranking distribution for 2008.

Figure 4.8: 2008 Generalisation vs. Specialisation box plot (Budisetia, 2009)
5 Summary NumberBox 1 – Generalisation RankingsBox 2 – Specialisation
RankingsMin14Q13586Median85140.5Q3143188Max225223
Table 4.7: 2008 Generalisation and Specialisation – 5 summary numbers
(Budisetia, 2009)

Results of the observation are such that;

* Distributions of values in group 1 (Generalisation) appear to be skewed to the
right and distribution of group 2 (Specialisation) appear to be skewed to the
left.
* There is no outliers observed from both groups
* The average level of group 1 (Generalisation) measurements is higher than for
group 2 (Specialisation).
* The spread of both groups is similar with a suggestion that group 1
(Generalisation) measurements are slightly more variable.

1.4.3 Case 3

Let X represent ‘localisation rankings’ and Y represent ‘globalisation rankings’

be the independent random variables based on 2007 global construction company
rank. We are interested in testing whether the distribution of localisation
rankings and globalisation rankings are the same or one is higher than the
other.
The hypotheses are:
H0 : µx = µy
H1 : µx> µy

The level of significance we going to use is 0.05

The test we are going to perform is one tailed z test for two populations.

X (Localisation Rankings)Y (Globalisation

Rankings)15911316220541612601141632068173361115164208918656211616521114189663118
16621220207764119167213212091065120168214222101166122169216242151267123170217252
25136812417121826156912517221938167012617422041177112717522145187212817622248197
31301772234923741311782245327751321795728761331805829771341817930781351828031811
36183843282137184863383138185883485139187933587141188963689142190993790143191100
39911441921034092145193105429414619410843951481951114497149196112469815119711747
10115319812150102154199129511041552001405210615620114754107157202150551091592031
5256110160204158n176.00m49.00117.2297.86Sx65.03Sy63.68Sx24229.51Sy24055.67
Table 4.8: 2007 Localisation and Globalisation rankings distribution (Budisetia,
2009)

The table above shows the rankings distribution of localisation and

globalisation companies based on observation. From Equation (5) in the previous
chapter, observed z-value could be calculated.
-
Z =
? [(S2x / n) + (S2y / m)]

(117.22 – 97.86)
z = = 1.873
? [(4229.51 / 176) + (4055.67 / 49)]

At an approximate significance level of ? = 0.05, the critical region is z ? z

0.05 = 1.645.

Figure 4.9: Location of Observed z-value for 2007 Localisation vs. Globalisation
(Budisetia, 2009)
Therefore, since the calculated value of the test statistic z = 1.873 > 1.645,
the null hypothesis is clearly rejected and conclude that µx> µy, such that the
average rankings of localisation is higher than the average rankings of
globalisation. As a result based on this hypothesis test, at 2007, global
leading companies have competitiveness on international market.
For a better illustration, two box plots were drawn as a pictorial
representation of the distribution of the set of data using matlab. Box 1
represents the localisation ranking distribution and Box 2 represents the
globalisation ranking distribution for 2007.

Figure 4.10: 2007 Localisation vs. Globalisation box plot (Budisetia, 2009)
5 Summary NumberBox 1 – Localisation RankingsBox 2 – Globalisation
RankingsMin14Q162.543Median122.596Q3174.5148.5Max224225
Table 4.9: 2007 Localisation and Globalisation – 5 summary numbers (Budisetia,
2009)

Results of the observation such that;

* Distributions of values in group 1 (Localisation) appear to be fairly
symmetric and slightly skewed to the left and distribution of group 2
(Globalisation) appear to be skewed to the right.
* There is no outliers observed from both groups
* The average level of group 2 (Globalisation) measurements is higher than for
group 1 (Localisation).
* The spread of both groups is similar with a suggestion that group 1
(Localisation) measurements are slightly more variable.
4.4.4 Case 4
Let X represent ‘generalisation rankings’ and Y represent ‘specialisation
rankings’ be the independent random variables based on 2007 global construction
company rank. We are interested in testing whether the distribution of
generalisation rankings and specialisation rankings are the same or one is
higher than the other.
The hypotheses are:
H0 : µx = µy
H1 : µx< µy
The level of significance we going to use is 0.05
The test we are going to perform is one tailed z test for two populations.
X(Generalisation Rankings)
Y(Specialisation
Rankings)15312531131832541266120184456128712318555812910124186860133181271879611
37241301881162138251311901266140411321911367143451341921468147481351931570148511
36194167114952139195177615155141197197915557142198208016159144199218516263145200
22881666414620223901686515020326911696915220427941717215320628951767315420729961
81741562083098189751572113199196771582133210020178159214331032058116021534105209
82163217351062108316421836108212841652193710921686167220381102258717022139112891
72222401149217322342115931742244311697175441171011774611810217847119104179491211
0718050122111182n111m11488.52136.83Sx60.24Sy60.88Sx23628.43Sy23706.30
Table 4.10: 2007 Generalisation and Specialisation rankings distribution
(Budisetia, 2009)

The table above shows the rankings distribution of localisation and

globalisation companies based on observation. From Equation (5) in the previous
chapter, observed z-value could be calculated.
-
z=
? [(S2x / n) + (S2y / m)]

(88.52 – 136.83)
z = = -5.983
? [(3628.43/ 111) + (3706.30/ 114)]

At an approximate significance level of ? = 0.05, the critical region is z ? -z

0.05 = -1.645.

Figure 4.11: Location of observed z-value for 2007 generalisation vs.

specialisation (Budisetia, 2009)
Therefore, since the calculated value of the test statistic z = -5.983 < -1.645,
the null hypothesis is clearly rejected and conclude that µx< µy, such that the
average rankings of generalisation is less than the average rankings of
specialisation. As a result, based on this hypothesis test, it seems that at
2007, global leading companies have competitiveness in several product areas.
For better illustration, two box plots were drawn as a pictorial representation
of the distribution of the set of data using matlab. Box 1 represents the
generalisation ranking distribution and Box 2 represents the specialisation
ranking distribution for 2007.

Figure 4.12: 2007 Generalisation vs. Specialisation box plot (Budisetia, 2009)

5 Summary NumberBox 1 – Generalisation RankingsBox 2 – Specialisation

RankingsMin13Q13584Median85148Q3129188Max225224
Table 4.11: 2008 Generalisation and Specialisation – 5 summary numbers
(Budisetia, 2009)

Results of the observation such that;

* Distributions of values in group 1 (Generalisation) appear to be skewed to the
right and distribution of group 2 (Specialisation) appear to be skewed to the
left.
* There is no outliers observed from both groups
* The average level of group 1 (Generalisation) measurements is higher than for
group 2 (Specialisation).
* The spread of both groups is similar with a suggestion that group 1
(Generalisation) measurements are slightly more variable.

5. Concluding Discussions
In this chapter our findings and results from the analysis are summarised based
on our research questions. Firstly, we present a comparison of the results
achieved from the globalisation and specialisation weight with the results from
the statistical interference and box plot distributions. Secondly, we present
strategic conclusions based on our findings.
5.1 General Conclusion
In this part of the chapter we will present our academic findings as conclusions
to our research problems. Firstly, the findings for our three sub problems will
be presented and as a summary we will present our conclusions on the main
research problem.
5.1.1 Observation Result

From our first method of analysing globalisation and specialisation of a company

by using the observation and weighted method, we found that:
a. The number of localised companies is more than the number of globalised
companies from the 225 ENR ranks.
b. The number of generalised companies is more than the number of specialised
companies from the 225 ENR ranks.
c. We could not conclude that there is a pattern of each individual group
whether it is increasing or decreasing based on the globalisation and
specialisation percentage.
d. Based on the four years data average, it seems that as the groups get higher
in rank, they move towards globalisation and generalisation.
e. Based on the average globalisation and specialisation, it seems that the top
225 global construction companies get more globalised and specialised by each
year; however the rate of these increases is not constant.
5.1.2 Rigorous Statistical Hypothesis Test Result
The second method is obtained by statistical hypothesis testing, and the
concluding results based on the tests are:
a. It seems that global leading companies have competitiveness on international
markets;
b. It seems that global leading companies have competitiveness in several
products or market areas.
5.1.3 Box Plot Distribution Result

This is the additional method we used to obtain more valid conclusions and as a
backup of our hypothesis testing.
The results of Globalisation vs. Localisation are:
a. Distribution of values in localisation group appear to be skewed to the left
and distribution of globalisation group appear to be skewed to the right, which
means that the globalisation group seems to be a top group with a higher
rankings.
b. There is no outlier observed from both groups as all the groups are between
the ranks of 1 to 225.
c. The average level of globalisation group measurement is higher than for
localisation group.
d. The spread of both groups is similar with a suggestion that localisation
group measurements are more variable.
The results of Specialisation vs. Generalisation are:
e. Distribution of values in generalisation group appear to be skewed to the
right and distribution of specialisation group appear to be skewed to the left,
which means that the generalisation group seems to be a top group with a higher
rankings.
f. There is no outlier observed from both groups as all the groups are between
the ranks of 1 to 225.
g. The average level of generalisation group measurement is higher than for
specialisation group.
h. The spread of both groups is similar with a suggestion that generalisation
group measurements are slightly more variable.

5.2 Strategic Conclusions

The concept of strategic planning indicates the daily management of the issues
and activities and is focused on decision making and performing important
activities on the basis of their priority. The essential assumption of this
management is that the environment is always changing. Therefore, strategic
management implies the continuous evaluation of the strategic plan based on the
stated priorities and the modification of this plan on the basis of new
environmental conditions (Temtime, 2004).
This thesis is focused on strategic planning and according to Porter’s generic
strategies that have been discussed in the literature review; there are three
types of generic strategies for construction industries such as cost leadership,
differentiation, and focus. In this research, we only focus on differentiation
and focus as it is difficult to identify the profit of each company.

The differentiation and focus strategy that we obtain from this thesis focusing
on only Globalisation vs. Localisation and Specialisation vs. Generalisation.
Therefore some limitations rose from this issue.
5.2.1 Limitations
There are some limitations raised in this research. Firstly, the data resources
that we used are based on ENR’s four years data and, therefore, we cannot draw a
valid conclusion based on only four years data. Secondly an issue can be raised
from this research such that is it possible to measure a company’s performance
based on globalisation and specialisation rate; and to answer this question, we
need to go back to the previous section such as the literature review that was
mentioned that in our research the strategic direction that we used in this
research are some of differentiation and focus. It is difficult to guage the
‘cost leadership’ of a company. Therefore this becomes one of the limitations of
this research as there are many things we need to take into account to analyse a
company’s strategic direction, while we only focus on globalisation and
specialisation performance of a company.
As a result, based on these limitations, we cannot draw up a valid conclusion
that either globalisation is better than localisation or generalisation is
better that specialisation. Even though our research shows that it seems that
most of the top global leading companies have competitiveness in international
markets and several products or market areas. However we can not conclude a
valid conclusion as there are several other factors need to be taken into
account.
In closing, clearly the conclusions drawn from the empirical study are most
applicable to large construction firms, as it is based on ENR’s top 225. Other
sorts of firms, such as smaller companies may face their own unique issues.
Clearly, deceive???/? observations and the conclusion regarding strategic
management throughout the construction industries are not even possible given
the relatively focused????? and small sample size.