Construction Economics

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Strategy of Barratt is to acquire land for establishing houses such as standalone and more for greater sustainability in the market (Barratt Developments PLC, 2015).In this context, the paper intends to plan for the next two years where the company needs to analyse the situation best suited. The paper will analyse whether Barratt should construct smaller houses or rely on the land bank for the future two years.Success of business depends on various aspects such as the macro and micro scenario the company is operating in. With regard to the housing industry, it can be stated that the success and efficient decision making with regard to the performance of business depends on several aspects. Building of houses depends on the potential of the market and the capabilities of the company. It is witnessed that Barratt is a large house builder having high potential in the market, as it understands the market requirements. Micro factors that lead to the success of the housing builders are the location, plans, orientation as well as building layout and size. On the other hand, the macro factors affecting the industry include the government policies, financing, labour cost and market potential. The conditions of the UK market have been identified to be unstable to a certain extent due to the rise in prices and potential political uncertainty (KnightFrank, 2015. Bunn amp. Rostom, 2014). Housing prices depend on factors such as economic growth, rate of interest, employment, consumer confidence and important aspect of supply and demand.Construction of large houses depends on various facets of the economy. With regard to Barratt, if the company decides to construct new large buildings, then the opportunity cost will be considerably high. The reason being for the construction of the large building, that company has to increase their land bank and need more financial aids. Furthermore, as per the market situation, it is