STRATEGIC MANAGEMENT in a company

STRATEGIC MANAGEMENT in a company

Basics

1. Strategic management is seen as an evolution since it involves growth processes from a predefined stage of conception to the final stage of a company objective. The evolution process of strategic management involves basic financial planning, forecast-based planning, strategic planning, and strategic management. Basic financial planning involves seeking better control by trying to meet budgets. This usually entails forming financial targets and monitoring revenues and costs. As such, the primary focus of the company is based on the functional aspects of the organization.

The second stage in the evolutionary process is forecast-based planning. In this stage, strategic management focuses on effective planning for growth by making predictions beyond timeframes outlined in the budget. The impact of the external environment on the organization is placed under scrutiny. The organization, therefore, allocates more resources and makes timely decisions concerning its long-term competitive position. The third stage of evolution is referred to as externally oriented planning. The organization seeks to increase its responsiveness to markets and competition at this stage. Customer needs are considered at this stage, and market phenomena are understood. The top management considers alternative courses of action.

The fourth and final stage is strategic management. It involves the usage of all resources to maintain a competitive advantage in the market. Managers at this stage have all learned to think strategically. This stage employs strategic planning and management while also including implementation, evaluation, and control of strategies. Strategic management is also described as a destination as every company should make efforts to achieve it, and it forms the final evolution phase of any company.

1. Our firm, ‘Tresca Real Estate,’ is a strategic management firm as it entails a lot of top management involvement. The top managers make the firm’s managerial decisions, and the respective managers oversee the execution. The top management also discusses the implications of each of the decisions made and the allocation of resources required. For instance, the acquisition of more real estate units had to be approved by the top management before any moves were made by the company to actualize it.

Similarly, another factor to consider is how the firm is future-oriented. Forecasts are made to determine what strategic moves are in the best interests of the company. The managers collect information and opinions from relevant departments on market trends to come up with appropriate forecasts. The information collected is then compiled and tested for consistency to provide qualitative forecasts. In addition to that, forecasts are also made based on historical data extrapolation, such as sale records and customer preferences. Some forecasts are based on the patterns observed from the data collected therefore used in forming appropriate strategies for the company.

The firm also invests large amounts of resources in managerial decisions. For instance, the latest pivot from residential real estate to commercial real estate required large investment capital. The managers oversee the expenditure and usage of these resources. The organization also exhibits a preparedness to make strategic decisions at any time.

1. The firm’s mission statement is “To provide quality homes at a pocket-friendly price.” This mission statement can be summarized as follows. The firm’s main objective is to help customers find homes should not stretch their purse strings so much. At the same time, the company aims to help customers find quality homes that are to their liking. The company’s main objectives for the year 2021 include: expanding the property list, cementing the market position, and partnering with a mortgage company to enhance customer’s convenience.

Corporate Governance

1. The board of directors in any company is in charge of assessing the business’s strategy and direction. One of the board of directors’ main roles is to recruit and evaluate the general manager or the CEO. They are also in charge of the supervision and compensation of the elected CEO. As a result, the decision made in electing a suitable candidate is imperative in ensuring the financial success of the company. The board is also responsible for evaluating the CEO, including having evaluation meetings in which the CEO reports the business’ progress.

The board of directors also provides policies of governance of the company. The system of governance is usually elaborately outlined in the company’s articles. However, the policies to be implemented in the company’s running are made by the board of directors (Mike Boland, 2009). The board comes up with policies to guide its own actions and those of the general manager. These policies are usually flexible enough to allow the board to achieve the overall goals of the company. The board of directors is also responsible for protecting the interests of members or investors in the company. They are also in charge of the company assets such as the business plant, facilities, and equipment, not excluding human resources.

1. One of the governance issues affecting the company’s board is short-termism (Thompson, 2013). The current company policy prioritizes short-term performance. This is to benefit the shareholders, and as such, there are quarterly earning targets that have been set to maximize profits and performance. The board of directors is, therefore, under a lot of pressure to meet these targets. Some of the board members are moving to have the company privatized to be able to achieve the company’s goals.

Some members are in favor of the change in the ownership model of the company. There was a debate on whether to pull the company’s listing from the stock exchange market. To shift focus from the shareholder value to its primary objective, the company was considering a more closed system of ownership (Fitzjohn, 2015). After enough discussions, the board decided to create a new transparent system. It decided to reform the sell-side research to provide long-term research. Regulators are now encouraging the grouping together of funds for collective engagement in the company, increasing the top management’s influence.

1. The company’s philanthropic arm, Tresca Foundation, raises funds annually to build shelters for homeless community members. Some of the proceeds go to the building and maintenance of these shelters. Approximately 10% of the company’s proceeds, accompanied by numerous donations from subsidiaries and individuals, are contributed to this noble cause of ensuring that even the homeless have a roof over their heads.

The inception of this nonprofit foundation was done after the company could stand on its own two feet. It has successfully seen the building of 30 shelters for the homeless with plans to expand outside the region. Bi-annual visits to the shelter are arranged to allow staff members to help in activities such as feeding the homeless and donating clothes. This is per the firm’s culture of love for its community. The foundation has helped the company to stay connected and grounded to its community.

Competition and Porter’s Five Forces.

1. One of the main factors that give our company a competitive edge over others is our marketing strategy. The strategy is heavily dependent on social media. In today’s age, e-commerce has evolved into a plethora of new and innovative marketing avenues. All company takes advantage of this by making sure the word is out across all social media. There are tech teams in charge of our online presence and ensure that it is felt across Instagram, Twitter, Facebook, Snapchat, and other platforms. We take an extra step than just leaving ads.

We also have a YouTube channel to give potential customers a glimpse of new listings by providing virtual walkthroughs end house tours. We also have employed some influences to talk about some of the listings and estates. We also make review videos from our previous customers who share their experiences of working with us and how their new homes feel. We even give tutorials videos for customers who may not fully understand all the processes involved in acquiring a new house. Included in these videos are the best value-added services that we can provide throughout this process. Our social media accounts are filled with high-resolution photos and videos of some of the properties that we work with.

1. The company’s competition can be analyzed using Porter’s five forces of power. For instance, the bargaining power of suppliers is low since the company deals with many property sellers. Each property has its own uniqueness; thus, there is a higher differentiation level in the product. The company also invests in buying already built properties to lower the bargaining power of the supplier. Other supplies include land, equipment, and building materials. The supplier with the most bargaining power is the land provider. This is because land supply is limited, and land prices are subject to changes in land policies made by the national and local governments.

For any consumer to purchase a real estate product, they have to consider the amount of money they are willing to invest in such a huge commitment. Buyers were private consumption-oriented tend to bargain more. Due to the standardization of the real estate market, there is a lack of unified product price management, thereby increasing price competition’s fierceness. In most real estate companies, price fluctuation rights are given to the distribution staff whose income is directly related to the sales performance. This flexibility in crisis gives buyers are higher bargaining power.

Our company uses data analytics in determining property prices, therefore reducing the bargaining power of the buyer.

The real estate market is huge and, as such, provides favorable conditions for new entrants. This creates a threat of new market entrants for our company. Academic enterprises that enter the real estate industry with massive investment capitals pose a threat to our company. Many entrants in an industry in which most companies have a small market share erodes profitability.

The threat of substitute products is also a major factor to consider. In the early stages of the company, the main focus was on residential homes; in particular, finished properties that were to be sold. Changes in product consumers’ consumption level sparked the need for close substitutes such as low-cost rental houses, ordinary rentals houses, and second-hand houses (Zhang, 2009). Some of our competitors offered these products enabling us to expand our listings to include them. Competition between rivals in the industry has helped us become differentiated in our products.

The sixth force in our company is the effect of complementors. Our real estate company works hand-in-hand with a mortgage company to provide extra convenience for customers. This complimentary symbiosis offers more value to our products as customers make only one stop when determining which property to buy and acquiring the funds to buy the selected property. Porter’s sixth force is integral in shaping profit potentials for any company. The convenience provided by our partnership with a mortgage company has boosted our profit margins significantly.

1. Our company seeks to follow the blue ocean strategy by extensive use of data analytics to accurately determine the property’s price. Some companies may rely on an agent to make pricing decisions to select properties based on educated guesses. We plan to change the norm by researching properties and subjecting the information collected to an algorithm that calculates the price based on various market factors. This, coupled with the constant fee for selling any property, will revolutionize the real estate industry.

Value Chain

1. As previously mentioned, the company operates on a fixed-fee business model. The fee is paid upfront, and the property is then listed. The property is then advertised online through our numerous business portals, exposing it to various potential buyers. This business model is aimed at increasing our customers’ savings. Initial consumer consultation is conducted by salaried employees whose compensation is dependent on both acquisition and successful sale of a listing. This incentive encourages employees to get as many listings as possible and sell them to get high compensations.
2. The team company can also be analyzed from Porter’s value chain model. The model comprises five main activities: inbound logistics, operations, outbound logistics, marketing, and sales and service (Portland, 1985). A value chain analysis can help the company obtain cost advantages and enhanced product differentiation to increase our competitive advantage.

Differentiation in inbound logistics can be attained by procuring high-quality inputs to offer high-quality products. The company acquires quality properties from customers before selling them. The company also renovates some properties at an additional cost to sell them at a higher price. Having a wide product range also enhances differentiation at the operations stage of the value chain. The company expanded its listing to include commercial houses, residential homes, offices, and even student hostels.

Concerning outbound logistics, the company offers convenient ordering procedures. With online customer care and support, customers can be guided throughout selling their properties and connecting with the potential buyers, all without necessarily using agents. Effective marketing and sales are also portrayed in aggressive marketing exhibited by the extensive use of social media platforms. Customer care’s superior service quality also distinguishes our company from other competitors in terms of service produced. As a result of the above, our net profit margin stands at 20%. Our target profit margin for the next financial year is 22%. One area in the value chain that we could improve on is the human resource integration of ideas. We could create more attractive awards for creativity to enable more creative projects to be undertaken.

General Strategy

1. The focus of our business strategy should be a long term solution rather than a short-term one. This is why our company seeks to be the number one leading real estate firm in the US and beyond. Our top position will be achieved by ensuring that the customer’s needs are well taken care of and that quality work will always supersede big returns. Some of our business strategies will include identifying a market niche and becoming an expert at it. The niche should give us an idea of what is imperative in the target market, the risks involved, and how to make the properties cost-effective. Secondly, we will increase the value of the quality of our properties. Properties can be managed and made to grow in value through redeveloping old properties, carefully selecting the locations of upcoming properties, or increasing the portfolio of the properties we currently have to increase our company’s value.

The properties may be appealing and of great value, but we may lose out on wonderful ideas if they are not well advertised. There we will also make a marketing budget. Marketing through billboards, TV advertisements, and social media is a great way to promote business and create awareness. Creating a website will allow us to reach a large and diverse group of people and establish our market presence.

A great company cannot run on its own. It depends on a multitude of competent and hardworking employees. Their satisfaction is one of our priorities to enhance productivity, efficiency, and innovation. This will be done by creating a conducive work environment and seeking to make sure they have good pay plus benefits and be treated with the respect they deserve.

We will also create an innovative environment. We will be open to getting ideas and opinions from our employees to ensure we give quality results.

Another way we can create awareness is through referrals from our customers. If we encourage people, we have worked with to refer us to other people to increase our exposure. Plus, most people trust their friends and families’ words more than any advertisement.

Creating a budget for marketing is one of the most crucial things. Marketing leads to exposure and awareness amongst individuals; hence it is a strong suit for us. The creation of a suitable work environment is also a good strategy due to enhancing employee performance. If the employees feel that they matter, they will be more devoted to achieving the company’s goals and targets as they will feel as if those goals are their own and that the company is theirs.

One weakness in our company strategy is relying on word of mouth to spread information about us. This is because this strategy is subjective as it relies on the customer’s personal experience and mood. Clearly, we know that not everyone will be fully satisfied with our services; hence we can never truly know if we can depend on them in our marketing strategy.

1. To ensure that we have a competitive edge against other companies, we will need to make our own brand. The branding can be used to market the company for years to come. Branding creates recognition among devout customers and even new customers. It can create a sense of loyalty among our customers as they believe that we have shared values and dreams similar to theirs. They will put their trust in us to realize their dreams. It also enhances credibility among our long customers, making it easier for them to return for more. It will enable us to launch new ideas and projects much more easily and without many obstacles. It will create a high level of confidence in our business among our customers.

References

Thompson, Jayne. (2020, October 10). Corporate Governance Issues & Challenges. bizfluent.com. Retrieved from https://bizfluent.com/info-7863014-corporate-governance- issues-challenges.html

Boland, M. (2009). The Role of the Board of Directors: Ag Decision Maker. Iowa State University. https://www.extension.iastate.edu/agdm/wholefarm/html/c5-71.html.

Fitzjohn-Sykes CFA, L., Laurie, Fitzjohn-Sykes, & Cfa. (2015). Solving Short-Termism. CFA Institute. https://www.cfainstitute.org/research/cfa-magazine/2015/solving-short-termism.

Zhang, X., Shen, L., Wu, Y., & Fan, L. C. (2009). Competitiveness assessment for real estate enterprises in china: A model‐procedure. International Journal of Strategic Property Management, 13(3), 229-245.

Michael E. Porter, (1985) Competitive Advantage: Creating and Sustaining Superior Performance.. Free Press, Accessed May 17, 2020.