CE 521 Construction Business Management
Assignment- 4
Chapter 1 Review questions
1. What are three external influences on business failure within construction industry?
There are certain external influences on business failure they are prolonged economic recession, loss of
major customer, new competition and shortage of skilled labor.
• If the economic recession is prolonged, then the available work is competed between a greater
number of the construction companies. This leads to reduction in profit margins, and this
jeopardizes the economic viability of the construction company that wins the contract.
• The activities of the construction firm depend significantly on their major customer. If they do not
have any other customer, then the construction company may go out of business as there is a lot
of financial strain on the firm because of its dependency on their major customer.
• If there is an increase in the competition in the market, then it poses a threat to the existing
construction firms. This increase in the competition also leads to greater risks and lower profit
margins.
• The good quality of work depends on the skilled labor. If there is shortage of skilled labor, that
