Evaluation of Risks and Rewards
In the UK construction industry, the potential entrants and competitors are crucial, especially when the firms operate in industrial and infrastructure sectors. They need manpower as well as equipment and have to follow safety procedures.All these requirements are significant barriers to the entry of international companies to the construction industry, but the existing players can operate normally. The threat of substitute products or services is also quite common like site-based infrastructure activities. The bargaining power of buyers and suppliers is influenced by same factors. They are the number of projects that are being undertaken within the UK market and the apparent prominence and readiness to work for a specific client(Burtonshaw-Gunn, 2008).
Comparing the competition among the firms, Midas has more competition from Rock Fall and Durkan as Rock Fall offers wide range of services in various countries globally and Durkan offers services in various sectors.
Construction firms are comparativelyundercapitalized than the rest of the UK economy which puts firms at more risk of financial failure and confines their ability to invest in business models requiring injections of capital(Ive and Murray, 2013). This is more in case of Tier 1 capital. Here, both Midas and Rock Fall are considered as Tier 2 firms as their debtor days are much more than creditor days. Yet, Durkan is found to be Tier 1 firm having more number of creditor days than debtor days. Hence, both Midas and Rock Fall are considered as high risk firms, yet their risk is low compared to their peer group. Considering the risk between Midas and Rock Fall, Rock Fall has more risk than Midas as it has global operations in more countries.