The Responsiveness Of A Firm In Sustaining The World Economy

TRP 511: Project Management Ai’da Fazihrah Binti Nazri

Abstract Growth is now more distributed and broad-based with the emergence of multiple centers of growth spearheaded by countries such as India and China. As emerging economies continue to grow, they must be involved in the process of global governance. People in India and China are looking for a better life and mobility and higher incomes, and no one can deny them those aspirations. In the unpredictable changes of global shifts that are constants most organization are seeking to improve existing goods and services through continuous improvement and innovation breakthrough strategies. Recent Trends of Worldwide Economy The movement of the Worldwide Economy from a Tradition Economy to a Global Economy has come through the technological advancements strengthened by modern technological discoveries starting from the Industrial Revolution in England. However, due to rapid globalization, the importance of national economies along with rules and regulations are decreasing. Mergers between multinational corporations are in vogue as every organization wants to exercise total control over the World Market. The developed nations control the World Economy aided by their superior technological advancements. Countries that foremost in World Economy that reflected in their higher status in the United Nations Organization, are USA, Japan, China, U.K., Germany, France, and Canada. Inreasing in globalized world economy, all companies are focusing on deriving the highest profits from the investments. To that end these are becoming multinational, having realized that affordable products can be circulated in the market of developed nations by outsourcing the production to the underdeveloped and developing countries. Several international regulators such as World Trade Organization (WTO), International Monetary Fund (IMF), and World Bank, however are aimed at keeping all profit-focused companies under a check.

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TRP 511: Project Management Ai’da Fazihrah Binti Nazri

The World Wide Economy though highly influenced by the developed countries shows signs of turning into a fair ground through the outsourcing of jobs to developing and underdeveloped nations, by most multinational companies based in the developed nations. This points towards a future balanced World Economy. Global Economy The term Global Economy refers to an integrated world economy with unrestricted

and

free

movement

of

goods,

services

and

labor

transnational. The concept of a global economy cannot be understood in isolation. Globalization need to be defined first as the integration of production and consumption in all markets across the world. Global economy is a characterized as a world economy with unified market for all goods produced in the entire world. Domestic producers have the opportunity to expand and raise capacity according to global demands and it’s also provides opportunity to domestic consumers to choose from a vast array of imported goods. A global economy aims to rationalize prices of all products globally.

Reduction in level of tariff and quotas under new WTO (World Trade Organization) restrictions, free flow of goods between the developed and the developing countries has become a distinct possibility. Globalization has boosted productivity and capacity of these companies to astronomical high

because

of

the

stiff

competition

at

the

international

level.

Improvement in technology in the developed countries such as United States of America and Japan has permeated to those of the developing economies of Asia, Africa and Latin America. This has enable the people of the developing countries acquire requisite technical skills and knowledge for operating sophisticated equipments that percolate throughout the economy and improves the general productivity of the labor in these countries by increasing the income levels. While a global economy or globalization has the distinct advantage of raising

world

productivity

and

incomes

and

bringing

about

an

improvement in the standards of living for all people at a global level, it has the dangerous side effect of growth with inequality. This has been Bach. of Town and Regional Planning (hons.), Semester July – November 2008

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TRP 511: Project Management Ai’da Fazihrah Binti Nazri

evidenced in the less developed economies of India, China and Brazil where the benefits of globalization have not percolated to the lowest levels. A Global Economy also leads to a shifting of jobs from the developed countries to the Third World Countries as wage rates are much lower here. This allows companies of the advanced nation to grow exponentially. For example, we might find computer chips produced in China be exported to USA for designing which may be subsequently used in Japanese computers supplied across the world. This process is called “outsourcing” and leads to exploitation

of

workers

in

Third

World

economies

where

income

inequalities already exist. Nonetheless, a global economy may be beneficial for the world at large. This may result in the economies of the world fighting issues such as global

warming,

climate

change

and

environmental

degradation

collectively and effectively. The global economy of today revolves around the issues of more trade liberalization, competition as a model of efficiency and the search for an intermediate between laissez-faire and too much state intervention which would help in achieving high rates of growth but not with sacrificing equity. Global economics or the global economy can be defined as the homogenization of the world economy into single large economy with the beginning of globalization. Globalization and the mechanisms of global economics are thus closely interconnected. The essential feature of globalization has been the widespread diffusion of technology and technological developments across all the countries of the world. As a study of the global economy, global economics concentrates itself on the factors of global supply and demand transcending mere national considerations. Globalization is argued to bring about better productivity and higher amounts of produced outputs for all commodities across the world because of widespread diffusion of advanced technologies. Countries specializing in their areas of comparative advantage can also increase the

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TRP 511: Project Management Ai’da Fazihrah Binti Nazri

world outputs of commodities. But the benefits of the process has not percolated down to the lowest level of society as the divide between the rich and poor is ever increasing in countries. Globalization has also thrown out many domestic producers of specific commodities with rising income inequality, being unable to cope with stiff competition meted out by low cost goods from abroad.

Global Economic Analysis is a macro-level study of all the economies of the world taken as a whole. Globalization has helped the world economy become more integrated and homogenized with the free movement of goods and services. Its objective is to unify prices of commodities and wages worldwide. Diffusion of technical knowledge and information is also a positive effect of globalization. Global economy is growing as a whole with a healthy growth rates hovering around 2% annually. The USA being the largest economy in the world continues to be the leader in terms of technological innovations, low unemployment rates, high per capita GDP and also few numbers below the poverty line. Political stability as a key economic indicator has also ensured that stock indices are at healthy levels in the developing countries. The indicator for the global economy means, economic variables or parameters that may determine global economic behavior over a period of time reflecting the movement of the global economy as a whole. Global economic indicators can be summarily comprised Real GDP growth rate, Real GDP per capita, Exports – Imports, Inflation rates, Unemployment, People below poverty line and Outstanding external debt (if any as a percentage of GDP). The global economy gave business the ability to market products and services all over the globe. It has also allowed them to develop partnerships and alliances throughout the world, which has become essential for success in today’s business. Prior to Globalization, the United States dominated the global economy. In past decades, however, the U.S. share of the global economy has shrunk to approximately 20%. This trend Bach. of Town and Regional Planning (hons.), Semester July – November 2008

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TRP 511: Project Management Ai’da Fazihrah Binti Nazri

is expected to continue as the economies of many newly industrialized countries continue to grow at a faster rate, this is called the balancing of the equilibrium.

World Economy The terms of world economy can be evaluated in a various way depending on the model used and this valuation can be represented in various ways. It is inseparable from the geography and ecology of Earth, and therefore of somewhat of a misnomer, since while definition and representations of the world economy vary widely, they must at a minimum exclude any consideration of resource or value based outside of the Earth. World economy valuations, models, representations, definitions, and use and exchange in the planet Earth, can be vary widely beyond the minimum standard of concerning value in production.

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TRP 511: Project Management Ai’da Fazihrah Binti Nazri

Limit questions of the world economy exclusively to human economic activity and world economy is typically judged in monetary terms, even in cases which there is no efficient market to help valuate certain goods or services or lack of independent research or government cooperation makes establishing figures difficult. Typical examples are illegal drugs (medicine purpose and etc) and other black market goods, which by any standard are a part of the world economy, but for which there is by definition no legal market of any kind. However, even in cases in which there is a clear and efficient market to establish a monetary value, economists do not typically use the current or official exchange rate to translate the monetary units of this market into a single unit for the world economy, since exchange rates typically do not closely reflect world-wide value, for example in cases where the volume or price of transactions is closely regulated by the government. Rather, market valuations in a local currency are typically translated to a single monetary unit using the idea of purchasing power. This is the method used below, which is used for estimating worldwide economic activity in terms of real US dollars. However, the world economy can be evaluated and expressed in many more ways. It is unclear, for example, how many of the world's 6.6 billion people have most of their economic activity reflected in these valuations.

World Economy in 2008 World economy is predicted to continue growing in 2008 with rate of growth is expected to be lower than the 2007. World growth rate for 2008 have been projected around 4.8%, whereas the ongoing growth rate for end 2007 is 5.2%. Central Banks of different countries are expected to stay away from monetary restriction to face inflation that been expected to contribute significantly to the growth of the 2008 world economy. In fact, the world economy is said to be driven by emerging economies like Bach. of Town and Regional Planning (hons.), Semester July – November 2008

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TRP 511: Project Management Ai’da Fazihrah Binti Nazri

China and India, rather than by economies of USA, European Countries and Japan. The US economy is experiencing low growth rates. By the end of 2007, the US economy is expected to register a growth rate of only 1.9 %, one of the lowest growth rates the United States of America has seen in recent years. Although economists do not perceive the risk of an immediate recession in the US economy, however, lack of growth in industrial production, decline in the real estate sector, slow growth of employment and insufficient business credit are factors that would weigh heavily on the growth of the US economy in 2008. Economists have projected a 3% growth for the US economy in 2008.

The Chinese economy is forecasted to grow at 10.9 % in 2008 which, in spite of a slowdown from 2007, would still be substantial. China’s global trade surplus is predicted to reach the 300 billion dollars mark next year which is a growth of 20%. Inflation of 4.5% is forecasted for the Chinese economy in 2008. A growth of above 8% has been forecasted for the Indian economy in 2008. According to Indian Finance Minister Mr. P. Chidambaram, Indian exports would reach the $200 billion mark in 2008. The growth of the service sector which contributes more than 50% to India’s GDP, the potential of the Indian Stock market and the appreciating Indian Rupee are expected to be major factors in India’s economic growth in 2008.

World Economy Indicator World economic indicators are specific index and measures that indicate not only the overall health of the global economy, but also provide some Bach. of Town and Regional Planning (hons.), Semester July – November 2008

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TRP 511: Project Management Ai’da Fazihrah Binti Nazri

insight into its future. Economic indicators can be found in many different forms. Economic statistics can also be use to illustrates the trends in economic activities. The most commonly used world economic indicators are rates of inflation, the unemployment rate, the real Growth Domestic Product (GDP) growth rate, GDP-Per Capita, GDP-Purchasing Power Parity, amounts of foreign direct investment, populations living below the poverty line, and current account balances. The utility of economic indicators can be defined by relating it to the economic activities of the world. An indicator is said to be procyclic if it moves in the direction of the economic movement (or cycle) of a country and the movement of the economic indicators is directly comparative to the trend of economic performance. When economies show a growing trend, the value of the procyclic economic indicators will increase. GDP is an ideal example of this type of world economic indicator.

Countercyclic economic indicators are inversely related to economic performance. The rate of unemployment is an example of a countercyclic type of economic indicator. The rate of unemployment will increase if the economy slows down. Another type of world economic indicator is known as an acyclic economic indicator that is not directly related to the economic health of the country. However, this indicator is not a good method by which an economy’s health may be measured. Statistics such as GDP figures, unemployment rates, current account balances, stock market values are economic indicators used on a monthly, quarterly or even on an immediate basis. Rates of unemployment are usually released every month, whereas the GDP figures are made available only on a quarterly basis. Economic indicators depend on the accuracy of the forthcoming changes in economic activities prediction. The world best economic indicators are those that foreshadow economic changes that are going to take place in

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TRP 511: Project Management Ai’da Fazihrah Binti Nazri

near future. Lagging world economic indicators, only respond to the changes if the economy a few quarters later such as unemployment rate. Unlike the leading and lagging economic indicators, a third category of indicators is the coincident economic indicators – these indicators move in the same pace with the changes in an economy. World Economy Statistical Indicator 1. Economy a. Gross World Product (purchasing power parity exchanges rate): $59.38 trillion (2005 est.), $51.48 trillion (2004) and $49 trillion (2002); b. Gross World Product (IMF 179 countries): market change rates $43.92 trillion (2005 est.), $40.12 trillion (2004) and $32.37 trillion (2002); c. GDP (real growth rate): 4.3% (2005 est.), 3.8% (2003), 2.7%(2001); d. GDP (per capita): purchasing power parity - $9,300 (2005 est.), $8,200(2003) and $7,900 (2002); e. GDP (composition by sector): agriculture 4%, industry 32%, and services 64% (2004 est.); f.

Inflation rate (consumer price): developed countries 1% to 4% typically, developing countries 5% to 60% typically, national inflation rates vary widely in individual cases;

g. Derivatives outstanding notional amount: $273 trillion (end of June 2004), $84 trillion (end of June 1998); h. Global debt issuance: $5.187 trillion (2004), $4.938 trillion (2003), $3.938 trillion (2002); and

i. Global equity issuance: $505 billion (2004, $388 billion (2003), $319 billion (2002). 2. Employment a. Unemployment

rate:

30%

combined

unemployment

and

underemployment in many non-industrialized countries; developed countries typically 4% - 12% unemployment. 3. Industries

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TRP 511: Project Management Ai’da Fazihrah Binti Nazri

a. Dominated by the onrush technology, especially in computers, robotics,

telecommunications

and

medicines

and

medical

equipement; most of these advances take place in OECD nations; only a small portion of non-OECD countries have succeed in rapidly adjusting

to

these

technological

forces;

they

accelerated

deployment of a new industrial technology is complicating already grim environmental problems; and b. Industrial production growth rate: 3% (2002 est.) 4. Energy a. Yearly

electrical

(production):

15,850,000

GWh

(2003st.),

14,850,000 GWh (2001 est.); b. Yearly electrical (consumption): 14,280,000 Gwh (2003 est.), 13,930,000 GWh (2001 est.) c. Oil (production): 79.65 million bbl/day (2003 est.), 75.46 million barrel/day (12,000,000 m³/d) (2001); d. Oil (consumption): 80.1 million bbl/day (2003 est.), 76.21 million barrel/day (12,120,000 m³/d) (2001); e. Oil (proved reserves): 1.025 trillion barrel (163 km³) (2001 est.); f.

Natural gas (production): 2,569 km³ (2001 est.);

g. Natural gas (consumption): 2,556 km³ (2001 est.);

h. Natural gas (proved reserves): 161,200 km³ (1 January 2002) 5. Cross-border a. Yearly exports: $6.6 trillion (f.o.b., 2002 est.);

b. Exports (commodities) : the whole range of industrial and agricultural goods and services;

c. Exports (partners) : US 17.4%, Germany 7.6%, UK 5.4%, France 5.1%, Japan 4.8%, China 4% (2002);

d. Yearly imports: $6.6 trillion (f.o.b., 2002 est.); e. Imports (commodities) : the whole range of industrial and agricultural goods and services

f. Imports (partners) : US 11.2%, Germany 9.2%, China 7%, Japan 6.8%, France 4.7%, UK 4% (2002)

g. Debt (external): $2 trillion for less developed countries (2002 est.)

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TRP 511: Project Management Ai’da Fazihrah Binti Nazri

6. Communication

a. Telephones (main lines in use): 843,923,500(2003), 1,263,367,600 (2005)

b. Telephones (mobile cellular): 2,168,433,600 (2005) c. Internet Service Providers (ISPs): 10,350 (2000 est.) d. Internet

users:

1,311,050,595

(January

18,

2008

est.),

1,091,730,861 (December 30, 2006 est.), 604,111,719 (2002 est.) Absolute Advantages of World Economy A country is said to have an absolute advantage over another country in the production of a good or services if it can produce that good and service using fewer real resources. Equivalently, using the same inputs, the country can produce more output. The concept of absolute advantage can also be applied to other economic entities, such as regions, cities or firms but we will focus attention on countries, specifically in relation to their production decisions and international trade flows. The fallacy of equating absolute advantages with cost advantages is a never ending source of confusion. Deviations between the two are caused by the fact real resources may receive different remunerations in different countries. To vividly illustrate the principle of absolute advantage, suppose that there are two countries, producing two goods, using labor as the only input. Goods can be traded without costs and workers are immobile between the two countries, but mobile between the two sectors within a country. All workers in a country are equally productive. As a case study, the two countries represent Japan that producing cars and USA that producing food. Production technology in Japan differs from that in the USA. Japan requires three units of labor to produce one unit of food, whereas the USA requires only two units of labor. Similarly, Japan needs six units of labor to produce one car, whereas the USA needs eight units of labor. Since Japan is more efficient in the production of cars and the USA is more efficient in the production of food, Japan has an absolute advantage in the production of cars and the USA has an absolute advantage in the production of food. Absence of absolute advantage is the examples discuss a situation where one country has an absolute advantage in the production of one good and the other country in the production of another good. The developing Bach. of Town and Regional Planning (hons.), Semester July – November 2008

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TRP 511: Project Management Ai’da Fazihrah Binti Nazri

countries may lack the technology to gain an absolute advantage in the production of any good, such that they cannot possibly compete on the global market and benefit from free trade. According to Ricardian model (comparative advantage) Technologically disadvantages countries can compete on the global market by paying lower wages and it turns out that absolute advantages is neither a necessary nor a sufficient condition for exporting a certain good and gain from international trade.

In reality goods are produced using several factors of production simultaneously, such as capital, land, and various types of labor. Usually, goods then cannot be ranked according to absolute advantage as their production in one country requires more of one input and simultaneously less of another input than in another country. These issues are analyzed in the Heckscher-Ohlin (factor abundance) theory of international trade. Many countries engage in intra-industry trade, the exchange of similar types of goods (e.g. simultaneously exporting and importing car parts). This type of trade is becoming ever more important. It can be based on market power and economies of scale, as analyzed in new trade theory.

Absolute advantages reflected by differences in technology are important for explaining current international trade flows and differences between countries in terms of income levels and wage rates. Daniel Trefler (1995) systematically analyzes these issues by combining the Heckscher-Ohlin model with technology differences, while taking into consideration the empirically observed home country bias (a consumer preference for domestically produced goods over otherwise identical imports). This combination explains about 93% of international trade flows. It also shows that technology differences are largely responsible for the deviations in income levels (and wage rates). Absolute advantage does retain relevance for understanding the modern world economy.

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TRP 511: Project Management Ai’da Fazihrah Binti Nazri

The World Top Ten Economies Key factors determine a country’s economic ranking including the business environment, infrastructure, tax rates, and the general ease of operations within that country. The world’s top ten economies can be determined by examining factors such as growth prospects, business environments, infrastructure, educational levels of the citizens, and governmental policies and institutions. The most authoritative ranking is the Global Competitiveness Report. It is produced in conjunction with the World Economic Forum, and captures both the perceptions of thousands of business leaders and statistical analysis by academics at universities and think tanks worldwide. Indeed, it includes the WEF’s Global Competitiveness Index, developed by Professor Martin at Columbia University, and the Business Competitiveness Index, developed by Professor Porter at the Harvard Business School. According to the Global Competitiveness Index 2007 – 2008, the top ten economies of the world are United States, Switzerland, Denmark, Sweden, Germany, Finland, Singapore, Japan, United Kingdom and Netherlands

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TRP 511: Project Management Ai’da Fazihrah Binti Nazri

The World Largest Economies Emerging economies are smaller than the developed countries, but they are growing faster and opening up, leading to greater investment opportunities than ever before. There are two methods of GDP calculation which are nominal GDP attempts to compare countries using current exchange rates to give an assessment of their clout within the global market and Purchasing Power Parity (PPP) GDP. It is a better measurement of the internal size of each market. The list of the Top 10 GDP by PPP. Ranki Country ng

Approximate GDP- Purchasing Power Parity

1

United States of America

$13,860,000,000,000

2

China

$7,043,000,000,000

3

Japan

$4,305,000,000,000

4

India

$2,965,000,000,000

5

Germany

$2,833,000,000,000

6

United Kingdom

$2,147,000,000,000

7

Russia

$2,076,000,000,000

8

France

$2,067,000,000,000

9

Brazil

$1,838,000,000,000

10

Italy

$1,800,000,000,000

Source: www.economywatch.com

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TRP 511: Project Management Ai’da Fazihrah Binti Nazri

A map from the CIA World Factbook will help to illustrate the differences between calculating world GDP figures on a PPP or nominal basis.

Source: www.economywatch.com

Economy of Malaysia Malaysia economy is growing and relatively with open economy. Economy of Malaysia was the 29th largest economy in the world in 2007 by purchasing power parity with GDP for 2007 was estimated to be $357.9 billion with growth rate of 5% - 7% seince 2007. with GDP per capita standing at US$14,400, from time to time, it has been considered a newly industrialized country. Income distribution in 2007 are 5.8 million households and 8.6% of the number have an monthly income below RM 1,000, 29.4% have income between RM 1,001 to RM2,000, while 19.8% earned between RM2,001 and RM3,000. 12.9% of the households earned between RM3,001 and RM4,000 and 8.6% between RM4,001 and RM5,000. Finally, around 15.8% of the households have an income of between RM5,001 and RM10,000 and 4.9% have an income of RM10,000 and above. As one of three countries that control the Strait of Malacca, international trade plays a large role in its economy. At one time, Malaysia was the largest producer of tin, rubber and palm oil in the world. Manufacturing has a large influence in the country's economy.

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TRP 511: Project Management Ai’da Fazihrah Binti Nazri

Malaysia percentage of Agriculture in total GDP has decline. The percentage share of agriculture has declined to 9.5% in 2004 from 20% in 1984. The percentage share of industry in total GDP has increased. The percentage share of industry has reached to 50.4% in 2004 from 38.5% in 1984. Manufacturing production has experienced a moderate growth in the second half of the year 2004. Manufacturing production moderated in 2004 reflecting a slowdown in external demand particularly from US and China. The service sector accounted for 41.5% of GDP in the year 1984 fell to 40.1% in 2004.

Source: www.economywatch.com

Advantages of Firms in Global Industries An industry is a group of competitors producing goods or services that compete products where the sources of competitive advantage are similar. In competitive strategy, firms seek to define and establish an approach to competing in their industry that is both profitable and sustainable. The competitive strategy underlie two central concerns which is, industry structure in which the firms compete and strategy in positioning within an industry. Not all industries offer equal opportunities for sustained profitability because industries differ widely in nature of competition and some of the industries positions are more profitable than other industries. Industries attractiveness and competitive position can be shaped by a firm. A successful firm will respond to their environment and attempt to influence it in their favor. Indeed, it is changes in industry structure, or the

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TRP 511: Project Management Ai’da Fazihrah Binti Nazri

emergence of new bases for competitive advantage, that underlie substantial shifts in competitive position. The nature of competition is embodied in five competitive factors which are, the threat of new entrants, the threat of substitute products or services, the bargaining power of suppliers, the bargaining power of buyers and the rivalry among the existing competitors. The five competitive forces determine industry profitable because they shape the prices firm can charge, the cost they can bear, and the investments required to compete in the industry. Firms create competitive advantage by perceiving or discovering new better ways to compete in an industry and bringing them to market, which is ultimately an act of innovation that include improvements in technology and better methods or ways of doing things. The most typical causes of innovations that shift competitive advantages are:

a. New

technologies.

Changes

in

technological

can

create

new

possibilities for the design of a product. Industries that are born when technological changes makes a new product feasible;

b. New or shifting buyer needs. A competitive advantage is often created or shifts when buyers develop new needs or priorities change significantly;

c. The emergence of a new industry segment. The opportunity for creating advantages arises when a new distinct segment of an industry emerges or a new way is conceived to regroup existing segments;

d. Shifting input costs or availability. A firm gains competitive advantage by optimizing based on the new conditions while competitors are saddled with assets and approaches tailored to the old ones; and

e. Changes in government regulations. Adjustments in the nature of government

regulation,

in

areas

such

as

products

standards,

environmental controls, restrictions on entry and trade barriers, are another common stimulus to innovation which results in competitive advantage.

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TRP 511: Project Management Ai’da Fazihrah Binti Nazri

The sustainability of competitive advantage depends on three conditions. Firstly, the particular source of the advantage. There is a hierarchy of sources of competitive advantage in terms of sustainability. Lower-order advantages such as labor costs or raw materials are relatively easy to imitate while high-order advantages such as propriety process technology, product differentiation based on unique products or services, brand reputation based on cumulative

marketing efforts and customers’

relationship are more durable and marked by number of characteristic. Secondly, higher-order advantages usually depend on a history of sustained and cumulative investments in physical facilities and specialized and often risky learning, research and development, or marketing. Thirdly and the most important, reason competitive advantages is sustained is constant improvement and upgrading. In order to sustain advantage a firm must become a moving target, creating new advantages at least as fast as competitors can replicate old ones. Sustaining advantages requires changes. It demands that a company exploit, rather than ignore industry trends and demands that a company invests to close off the avenues along which competitors could attack. To sustain its position, a firm may have to destroy old advantages to create new, higher-order ones. Change is extraordinarily painful and difficult for any successful organization is the reason why few firms sustain their position.

Challenges in Facing Construction Industry Faizul Hj Abdullah in his article ‘Globalisation: Rethinking the Construction Industry to Adopt Changing Trends’, has enlighten that the main critical

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TRP 511: Project Management Ai’da Fazihrah Binti Nazri

challenges facing the construction industry are their abilities to have innovative design capability, be information technology focused and strongly self-financing. Innovative design capability is required together with improved efficiency, effectiveness, productivity and competitiveness. Specific benefits of construction innovation can include better environmental protection or sustainability, improved safety and health and improved quality at lower cost. Companies that adopt innovation may see higher profits, increased market

share,

access

to

new

markets

and

hence

improved

competitiveness. To prevent construction companies from really venturing and exploring in determining new core competencies, through innovation, which hopefully could provide spin-off benefits to the overall construction business, they are barriers that are characterized by several distinct factors and among other, which are:

a. Fragmentation. The characteristic of the construction industry itself prohibited contractors from being innovative in their design capabilities because the industry generally is highly fragmented and too local;

b. Limited resources. Pursuing innovation often requires substantial amounts of resources, which is a function of time, money, personnel and equipment. Whether innovation is pursued purposely through R&D or on a pilot application basis, some amount of resources investment is required; and

c. Liability. To fear of defects and health, safety or environmental hazards is often great enough to defer construction companies from adopting new materials and technologies. These are few dominant factors that prohibit construction companies from taking up the options to further explore innovative design.

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Sources and Refferences Adam Smith’s (1995), World Economy Absolute Advantages, New York: Free Press Define Global Economy, Economy Watch, http://www.economywatch.com/world_economy/world-economicindicators/global-economy/define-global-economy, Retrieved 3rd September 2008 Economic Structure Of Malaysia, Economy Watch, http://www.economywatch.com/world_economy/economic-structure-ofmalaysia, Retrieved 3rd September 2008 Economy of Malaysia, Wikipedia Free Encylopedia, http://en.wikipedia.org/wiki/Economy_of_Malaysia, Retrieved 3rd September 2008 Faizul Hj Abdullah, Globalisation:Rethinking the Construction Industry to Adopt Changing Trends, Univerity Technology MARA Global Economic Analysis, Economy Watch, http://www.economywatch.com/world_economy/world-economicindicators/global-economy/global-economic-analysis, Retrieved 3rd September 2008 Global Economic Indicators, Economy Watch, http://www.economywatch.com/world_economy/world-economicindicators/global-economy/global-economic-indicators, Retrieved 3rd September 2008 Global Economics, Economy Watch, http://www.economywatch.com/world_economy/world-economicindicators/global-economy/global-economics, Retrieved 3rd September 2008

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TRP 511: Project Management Ai’da Fazihrah Binti Nazri

Global Economy, Economy Watch, http://www.economywatch.com/world_economy/world-economicindicators/global-economy/, Retrieved 3rd September 2008 Malaysia Economy, Economy Watch, http://www.economywatch.com/world_economy/malaysiaeconomy,Retrieved 3rd September 2008 Michael Porter (1990), The Competetive Advantages of Nations Recent Trends of World Wide Economy, Economy Watch, http://www.economywatch.com/recent-trends-of-worldwideeconomy/,Retrieved 3rd September 2008 The Global Economy, Wikipedia Free Encylopedia, http://en.wikipedia.org/wiki/The_Global_Economy, Retrieved 26th August 2008. The World’s Top Ten Economies, Economy Watch, http://www.economywatch.com/economies-in-top/, Retrieved 3rd September 2008 Top World Economies, Economy Watch, http://www.economywatch.com/top-world-economies /,Retrieved 3rd September 2008 World Economic Indicators, Economy Watch, http://www.economywatch.com/world_economy/, Retrieved 3rd September 2008 World Economy in 2008, Economy Watch, http://www.economywatch.com/world_economy_in_2008/, Retrieved 3rd September 2008

Bach. of Town and Regional Planning (hons.), Semester July – November 2008

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TRP 511: Project Management Ai’da Fazihrah Binti Nazri

World Economy, Economy Watch, http://www.economywatch.com/world_economy/, Retrieved 3rd September 2008 World Economy, Wikipedia Free Encylopedia, http://en.wikipedia.org/wiki/World_economy, Retrieved 26th August 2008.

Bach. of Town and Regional Planning (hons.), Semester July – November 2008

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