SWOT Analysis of Trump Organization - Case Study Example

Introduction Trump Organization is a conglomerate that specializes in real e development and has stakes “in prime residential and commercial properties in New York City, including Trump Tower; the Trump International Hotel and Tower; the office building at 40 Wall Street in Manhattan; Trump World Tower, near the United Nations in New York; and other luxury residential real estate. Other Trump Organization assets include interests in a Florida resort, a skyscraper in Seoul, South Korea, a string of golf courses, and the Miss Universe Organization, which runs the Miss USA, Miss Teen USA, and Miss Universe beauty pageants (Funding Universe).” The company is started and managed by Donald Trump, a University of Pennsylvania-Wharton School of Finance graduate and successful realtor-turned-media celebrity through his TV show “The Apprentice.” Founded in 1974, the Trump Organization is a private company and currently has 15,000 employees. Body 1. Environmental scanning The Trump Organization is affected by a number of external factors that influence its decisions both in terms concerning its operations and its response to the market. While the Trump Organization includes a diverse line of businesses, these businesses can be categorized in three major businesses: real estate--residential and commercial properties, hotel and gaming, media and entertainment. These businesses where the Trump Organization has stakes are affected by factors which include political-legal, economic, socio-cultural and technological trends that influence the behavior of the organization. Some of the political-legal trends that have impact on the organization include government regulations such as relevant real estate laws, relevant taxation laws, and provisions for the real estate development industry. Among the economic trends that have potential impact on the company’s operations include: the financial crunch in the US economy, which raises the risk for the highly-leveraged real estate business of Trump Organization; the recession which can result in lower demands for the product, especially a product like real estate; aside from lower demands, some businesses are going out of business which could result in high vacancies for the company; the stock market crash that could result in capital flight, which is applicable for the company’s publicly traded subsidiaries; and the overall down market for real estate because of the recession. Changes in the US society can also impact the Trump Organization. The retirement of baby boomers, increasing power of women, increasing globalization of business, mass customization, the shift in aesthetic and electronic lifestyle due to popular culture and influence of media, and increase in minority immigrants are some of the trends that can potentially impact the company’s businesses. As for the technological trends, information technology continues to improve which can impact the company’s businesses specifically in terms of engineering and construction, as well as the increasing efficiency brought by information technology for business systems. These trends offer some hints for opportunities which the corporation can take advantage of, and threats that Trump Organization can prepare for. The impacts of these trends in the company’s operations will be discussed in greater details in the succeeding sections. 2. Internal analysis --Strengths (comparative advantages) Production and Information Technology The Production and Information Technology of the Trump Organization is one of the competitive advantages of the company, especially in relation to its main line of business which is real estate. This expertise that has been developed over the course of years has given the Trump name an equivalent of a quality property. This knowledge has been started by Donald Trump’s father, from which Donald has acquired his technical skills in real estate. This is the construction side of the Trump real estate business. With the experience of Donald’s father coupled with the good manpower that works behind the construction of the many large properties, the Production and Information Technology of the company has offered a relative advantage to the competition—the division which aims to achieve both efficiency, quality and aesthetic design of the properties. While quality has been associated with the Trump brand, this quality is developed by the keen expertise of the people from Production and Information Technology division of the company. The systems that are used in order to construct the magnificent towers and skyscrapers the company develops is the source of competitive advantage of the company. Research and Development In line with the Production and Information Technology function of the Trump Organization, Research and Development plays a huge part in the company’s operations. Research and Development takes charge of surveying of the properties, feasibility studies regarding projects, subsequent findings for improvements on amenities of the properties, etc. The research and development function serves as a strong support to the strength of the Production and Information Technology function of the company. A company that invests in knowledge of its workers always has advantage, and Mr. Trump gives a lot of emphasis on education within the workforce. The production side of the business, coupled with the research and development function in order to make accurate decisions based on knowledge and understanding of facts is the other competitive advantage of the company. Finance and Accounting Finance and accounting in the company plays a good support function in the company that if not for it, efficiency in terms of cost control will not be maintained. Such is very important in order to grow a corporation to that as the Trump Organization. The finance and accounting function in the company aids in the project development, as proper costing and managerial policies are important for the success. Also, with the company’s good accounting and finance function, capital budgeting are prioritized in order to make sure that projects go well, as these projects cost huge amounts in terms of development, construction and manpower. This is one of the competitive advantages of the company --Weaknesses (disadvantages) Sales and Marketing Although the Sales and Marketing of the company does well in doing its job in the overall operation of the company—which is to generate sales, a huge dependence on an individual who is a celebrity puts the company at a relative disadvantage. This is because, although Donald Trump remains a celebrity and his publicity continues to serve as a fuel to the marketing efforts of the company, nothing beats a system of marketing which aims to study the customers closely in order to handle them—especially during these times where a good brand is definitely an asset. While the Donald Trump name has been a successful brand in that according to some analysts, it adds premium to the property, the corporate brand has to be managed well by a system and not dependent on the individual. When creating the brand, although the brand personality relies on the person, the brand has to be distinct in that it can create relationship with the customers. To put a personal stamp on the property definitely increases the market value, but only until the public’s perception of the personality is good that the purchase decision is influenced by the name. But after that, a system which will take charge of management of the brand itself apart from the individual will ensure that the long-term success of the company can be sustained. Human Resource Management The Human Resources Management function of the company plays a huge role in the development of the corporation by choosing the right people. While with the success of the Trump Organization, it can be assumed that Mr. Trump has done a good job of choosing his people well, like the marketing function, without a good system to ensure its development, a corporation is at a disadvantage. The human resource function of an organization is the strategic partner of it in achieving goals. In order to have competitive advantage through the people, various human resource policies should be carried on and implemented through a system. While the human resource requirements of the organization differs from the other business model in other industries, the competitive disadvantage lies in lack of the system to rival those companies who, gather awards such as “best employer” or “best place to work at.” Therefore, in order for the Trump Organization to flourish well, it has to give emphasis on its people through human resource policies which have been the best practices in the country. 3. External analysis --- Opportunities Increasing globalization of businesses The increasing globalization of businesses is an opportunity to the Trump Organization for: one, the demand for office spaces for businesses that come to the country and usually station themselves in Manhattan; two, increase in markets for gaming and hotel industry, as well as the demands for residential properties. This increasing globalization enables businesses to put offices in different countries where they conduct businesses. And while Manhattan seems to be one of those places where businesses will go, the Trump Organization has an additional market both for the commercial properties, and residential properties due to the additional people that will be assigned to work for the business. Apart from these, the increase in the people from other countries when other businesses conduct their operations in the US adds to the market for the gaming and hotel industry the Trump organization is in, and additional audience to the company’s media and entertainment businesses. Popular culture due to media influences Another opportunity that the Trump Organization can capitalize on is the strength of the popular culture in the US due to influences of the media. Due to the popularization of the television, the Trump Organization with its media arm can take advantage of the opportunity. Apart from this opportunity brought by television, the influences of the media shape the aesthetic lifestyle of the people, which is one of the competitive advantages of the company when it comes to its real estate structures. By mirroring the ideals of the people brought by the media’s influences to the company’s properties and products, another opportunity is waiting for the organization. The popular culture also gives the company an advantage of carrying marketing efforts through television and other media that appeal to the people. By utilizing these when appealing to them, the company can further enhance its brand image. Down market for the real estate While the real estate market is not good to sell properties, it is the time for the organization to invest in real estate properties. Because the prices for real estate are low, Trump Organization has many choices as to where it can develop more properties in order to capitalize on the low costs. This is an opportunity for companies who are at the real estate industry, especially developers that have tremendous expertise in the business. During these times, Trump Organization can set an eye on more profitable properties where it can build its next project next. Improving technology for production, communication and business systems The improving technology for communication can be good most especially to the media arm of the corporation. When the technology allows more reach in terms of channels aside from television, these improvements in technology such as in mobile phones, the internet, etc can be a good opportunity which the Trump Organization can take advantage of. ---Threats Businesses shutting down due to recession Because an organization is part of a larger whole such as a country’s economy, a thing like recession can definitely impact the organization. Recession brings many businesses to go down. When businesses go down and get out of the industry, previous office spaces go vacant. This can be the case for the Trump Organization’s commercial properties business. As many businesses go bankrupt because of a down economy, vacancy rate may tend to increase as previous tenants leave. Lower demand for products due to recession As recession impacts businesses that are some of Trump Organization’s market for the commercial property, recession also impacts the consumption aspect of the economy. Due to decrease in spending, gaming and hotel industry can face some difficulty in meeting demands. This could have a significant impact on the company’s operations. Buyers of real estate residential properties will also have a harder time to look for financing due to recession. The lower demand for products will affect Trump Organization in that it will be hard for the company to produce more sales. When consumers are curbing down on spending during hard times, products other than necessities such as golf courses, casinos and hotels can be affected. Although the target market of these who are the very rich are not so much affected, there will still be an impact on the corporation’s sales. Increasing costs in commodities The increasing costs in commodities have a significant effect on the Trump Organization especially in construction. The prices in the inputs the organization uses will definitely have an effect on the corporation’s cost structure. The increasing costs of commodities especially oil have a significant impact due to the spiraling effect of oil price increases in the economy. As the prices of inputs rise, the significant costs for constructions as well as other businesses of the company is affected. Conclusion Despite the many threats that the Trump Organization faces in relation to the crisis in the US economy, the company also has a lot of opportunities to capitalize on. These opportunities come from social trends in which the company can utilize its competitive advantages. Some of these threats include the effects of financial crunch to real estate financing, as well as fewer demands because of the decrease in consumers’ spending. Aside from the demands from end-consumers, businesses are shutting down too, contributing to vacancies in commercial properties. While these threats are mainly related with the recession, long-term opportunities such as the increasing globalization of businesses which will bring people from other countries to the US can increase the potential market of the Trump organization. Also, the popular culture due to influences of the media can be taken advantage of by the company in doing its operations, such as aesthetic appeals and lifestyle attributes. Lastly, these threats and opportunities can be addressed by linking them to the strengths and weaknesses of the organizations. Strengths are to be utilized in order to take advantage of opportunities; weaknesses should be addressed so the effects of the threats are minimized. Some of these strengths include the company’s production and information technology division, which is supported by the company’s research and development function, as well as finance and accounting. However, weaknesses of the company lies in its marketing function and human resource function where these functions do not play a strategic role and operate through definite systems to make it to the “best practices” in the industry. Works Cited Bartol, K., Martin, D., Tein, M., & Matthews, G. “Management: A Pacific Rim Focus.” McGraw Hill Company, Australia, 2001. Duncan, Tom. “Principles of Advertising and IMC.” 2nd ed. New Jersey: McGraw-Hill, 2005. "The Trump Organization Company History." FundingUniverse.com (2008). 12 November 2008 . "The Trump Organization Press Releases." Trump.com (2008). 12 November 2008 < http://www.trump.com/Press_Room/Press_Room.asp >. Read More