Housing Studies: Managing the New Housing - Term Paper Example

Managing the New Housing (Housing Studies) Table of Contents Introduction 3 Potential Major Risk Factors Facing the Medium Sized Developing Housing Associations 4 Difficulties in Accessing Loans 4 Management Restructure 5 Capability of Developing Business Strategy 6 Welfare Reforms 7 Changing Governmental Regulation 8 Mergers/Takeovers Associated Risks 9 Strategies Associated with Addressing Risk Areas 10 Strategies to Mitigate the Problem Areas 10 Welfare Reforms 11 Lack of Finance 12 Management Restructure 13 Developing the Capacity 13 Takeover as well as Mergers 15 Changing Government Rules and Regulations 15 Medium and Long-Term Prospective 16 Case Study Example 17 Conclusion 19 References 21 Introduction The housing industry in the United Kingdom can be recognised as one of the emerging sectors, which has been playing an important role in the overall economic growth of the nation. The housing associations (HAs) in the current UK market have been addressing the need of the citizens of the nation in a competent manner for a number of years which has enabled the nation to achieve substantial economic development and stability. However, the associations underlying in the small and medium size segments have been facing different challenges both from the internal and external environmental factors (Mullins, 2010). In this context, it is observed that the small and medium sized housing development associations have been witnessed to experience significant risks due to the emerging competitiveness in the respective industry. Moreover, the small and medium sized housing associations in the present UK housing industry are also facing different external challenges including the availability of financial support and changing governmental regulations among others (Joseph Rowntree Foundation, 1998). Emphasising upon the present scenario in the UK housing industry, the major purpose of this report is to identify and analyse the potential risk areas that create an impact upon the current business practices of small and medium sized housing associations. The discussion of this report will also incorporate adequate measures and strategies which can enable the HA associations especially the small and medium organisations to effectively address the potential challenges in the respective industry. Certain relevant case studies instances will also be illustrated through reflecting upon the present practices of the medium sized developing housing associations in the UK market which would facilitate to determine and derive adequate information concerning the potential risk areas. Potential Major Risk Factors Facing the Medium Sized Developing Housing Associations In relation to the fiercely developing housing industry in the UK, the developing housing associations especially the Medium Sized Housing Associations tend to face different risk areas in order to efficiently perform their diverse range of business operations (Stephens, 2011). A few of the major risk areas that have been identified in the present UK housing industry are discussed in the following section. Difficulties in Accessing Loans Accessing adequate financial support can be regarded as one of the major risk areas for the developing medium sized HAs. The financial service providers in the UK at times tend to offer inadequate financial support or any loan services to the medium sized HAs due to their lesser capability as well as lower market share in the respective industry. Moreover, the growing number of SMEs in the housing industry enables to increase different investment related risks for the UK financial service providers which can further impact upon the organisations to obtain a feasible amount of financial support. In relation to the present scenario in the UK housing industry, it has been observed that a large number of HAs have emerged that signifies greater amount of risks for the financial institutions within the UK (Stephens, 2011). Due to the fiercely increasing number of medium sized HAs, the UK financial institutions are highly focused on lending adequate amount of loan facilities through justifying the potential growth of the marketers. Moreover, the changing interest rates along with monthly repayment concerning the variable rates in mortgages can also be a major constraint for the medium sized developing HAs to acquire significant financial support from the UK institutions (Mullins, 2010). Management Restructure Management restructure refers to the changing face of the management teams of the medium sized HAs in the housing industry. According to the current management structure of the medium sized HAs in the respective industry, firms are often observed to reorganise their structure relating to managing various internal and external operations. The changing process of the management structure can also be regarded as one of the major affecting causes for the medium sized developing HAs in the UK housing industry. This can be stated due to the increasing competitiveness of the larger housing associations which signifies rapid challenges for the medium sized HAs to increase their efficiency in the similar market or industry. Moreover, the medium sized HAs in the current UK housing market are highly focused on attaining better control of the processes which further initiate to the requirement for change with regard to their management strategies. In this regard, the decision of changing the prevailing management structure might at times reduce the ultimate competencies of the medium sized HAs and provide adequate opportunities for the larger firms to attain greater profitability. Therefore, it can be stated that restructuring of management structure can also be a major risk factor for the medium sized HAs to attain competitive position in the growing UK housing market (KPMG, 2011). Capability of Developing Business Strategy Although the integration of new business strategies can facilitate to render adequate support for the medium sized developing HAs to compete with the increasing pace in the respective industry however it can also bring certain ramifications that can have an impact on the overall performance of the organisations. In relation to the present business strategies of the medium sized HAs in the UK housing industry, organisations seek to implement different innovative strategies relating to their various business operations including sales and marketing, operations along with environmental practices. However, due to the aspect of less financial stability and inadequate availability of resource as compared to the large organisations, it creates certain difficulties for the organisations to attain their desired business goals. In order to strongly compete with the market leaders, the medium sized HAs in the housing industry tend to execute rapid transformations in terms of their innovation processes which cause major risks with regard to incurring financial losses for the organisations. Contextually, the changes within the organisational process can further deter the productive culture within the organisations when competing with larger and more powerful organisations. In order to build long-term sustainability in the business industries, maintaining prolific culture is an utmost factor for the medium sized developing HAs that aspire to establish their position in the respective industry (Bordia & et. al., 2005). Therefore, the less capability of making effective business strategies can also be recognised as a major risk factor for the medium sized developing HAs to effectively compete with the dominant marketers in the respective industry. Welfare Reforms Welfare reforms in the housing industry involve different complexities concerning the administrative rules and principles which can increase the potential number of fraudulent claims. In this regard, the practice can severely impact the performance of the medium sized developing HAs with regard to ensuring long-term sustainability in the competitive UK housing market. Moreover, the risk of fraudulent activities can further formulate significant issues for the associations which can render them to lose a large group of stakeholders including suppliers, investors, potential customers as well as their existing employees. Moreover, the increasing risk of fraudulent practice through the integration of welfare reforms can also create various unintended consequences which can lead to reducing the competitive position of the medium sized developing HAs (Moat’s Communications and Public Affairs, 2012). Changing Governmental Regulation The housing industry in the UK is one of the major economic resources, which enables the nation to strengthen its economic stability. In relation to the present day context, the industry has been recognised as a crucial part of the overall infrastructure of the UK. Therefore, the industry is highly influenced by the governmental regulations. In this regard, the changing governmental regulations towards the efficiency of the overall industry can also cause significant risk for the medium sized developing HAs. According to the fiercely increasing performance of the UK housing industry, the government seeks to enact different policies and restrictions towards the business operations performed by the HAs within the nation. Contextually, the changing governmental regulations can be a major constraint for the medium sized developing HAs to independently perform their range of business activities and compete against the existing rivals within the industry (Jones, 2009; Somerville & Mayer, 2003). According to the present changing governmental regulations in the UK housing industry, it can be identified that there are various factors which can have an impact on the overall performance of the medium sized developing HAs. In this context, a few of the major changes in the governmental regulations relating to tariff structure, interest rates of the government owned financial institutions along with environmental awareness are the major constraints for the medium sized developing HAs to build strong sustainability in the respective industry (Somerville & Mayer, 2003). Mergers/Takeovers Associated Risks The medium sized developing housing associations in the present UK housing industry tend to merge or align with the large and well-known organisations in order to attain greater control and adequate support of different resources. Moreover, the alignment of organisational process with the leading housing organisations can also enable the medium sized developing HAs to efficiently perform their business operations and develop the brand position in the present UK housing market. However, the process of aligning business with the leading organisations can also be a major constraint for the medium sized developing HAs to independently perform their business operations (Chui, 2011). In this regard, the major risk for the medium sized developing HAs in the UK housing industry is to lose the interests of their different groups of stakeholder. The process of merger or takeover generally involves higher risks especially for the small or medium entrepreneurs due to the nature of performing business operations in accordance with the merged company. As a consequence, the medium sized developing HAs tend to lose their localism or democracy within the market which can further create a major impact on the firms to maintain a long-term sustainability in the respective market (Chui, 2011). Strategies Associated with Addressing Risk Areas At the present era, it is determined that medium sized developing housing associations have been facing enormous challenges with regard to various contexts including welfares reforms, availability of finance, mergers, managing the restructure as well as changing government rules and regulations among others. However, to sort out the acute housing crisis of London along with the other areas of the UK, the associations as well as government have to take valuable strategies. In terms of certain current research reports, it is estimated that in London there are in average one house for around ten Londoners (Guardian News and Media Limited, 2013). Therefore, in order to mitigate these challenging issues the housing associations can consult with g320, representative body for smaller housing associations across London to share the various challenges and obtain valuable suggestions for strengthening and increasing the potentiality as well as sustainability (g320, 2010). Besides, in the context of governance regarding various aspects including banking and finance, legal activities, human resources management as well as marketing and communication the associations also can obtain assist directly from Badenoch and Clark, an advisory organisation, for designing effective strategies in this concern (Badenoch & Clark, 2013). Strategies to Mitigate the Problem Areas Housing crises in London along with greater parts of the UK is one of the booming issues in the nation in recent times. The various lingering accumulated challenges have created sustained difficulties for the dwellers of the areas in and around London. For this reason, the various risks as well as challenges can be significantly mitigated through implementing effective strategies by the medium sized developing housing associations. Regarding this context, an assortment of strategies to alleviate the risks as well as challenges is discussed below: Welfare Reforms With regard to the housing crisis, the United Kingdom is facing a critical crisis as well as risk in terms of welfare reforms. Regarding this context, to mitigate this challenge, medium sized developing housing associations should be aiming to obtain fund related support as well as services to help residents deal with the difficulties arriving from welfare reform. Besides, in this context they are required to implement the auditing strategy to get the realistic picture of the households. Customer insight and better information only can help to build comprehensive financial models for changing the welfare scenario of households. In this parameter, the medium sized developing HAs also can make an effective collaboration with the high profile individuals of the society to acquire the required financial support as well as advices. Household systems regarding welfare reform is continuously affected with the complex policies as well as ever-changing systems. The perils as well as pitfalls with regard to obtaining loans are also providing a gigantic challenge for the neighbourhoods of London. Therefore, to sort out this problem an individual as well as housing associations should get long-term financial support from the government authorities as well as from financial institutes. Besides, to alleviate this problem the associations also can take initiatives to create awareness concerning the importance of financial responsiveness as well as individual budgeting among the young generation to address the future problem (Brown, 2013). Lack of Finance For the medium sized developing HAs another crucial risk is associated to the development of households due to a lack of financial availability as well as loan. For this risk, housing associations as well as government should take financial inclusion strategy to diminish the problem. The term ‘financial inclusion’ can be defined as the process of liberation of financial services at reasonable costs to the low income group people as well as underdeveloped society. From the perspective of the United Kingdom’s housing crises, it is required to include the necessary organisational responses to the increasingly commercial environment in which the social landlords can operate. The central government and the regulatory bodies should be monitoring the process concerning the development of the accountability of the social landlords. Besides, the authority also can monitor through providing valuable requisite information as well as guidance for effective utilisation of the resources. In this context, risks also accumulate and come through the aspect of a lack of land. Therefore, as per economical perspective and in relation to resource utilisation the medium sized housing organizations as well as social landlords also can cooperate with the large builders. This strategy also will be helpful with regard to decreasing the financial challenges (National Housing Federation, 2013). Management Restructure In the context of medium sized developing HAs, restructuring the management process is undeniably a vital challenge. The various problems related with the medium sized HAs also include initially limited resources i.e. human power, lack of skills, unconstructive management process and financial instability among others. In addition, this type of organisations also faces problems in terms of market dominance as well as communication challenges. Therefore, to reduce these challenges the medium sized HAs should cooperate or merge with the larger organisations. Regarding this context, building partnership with the larger organisations for the sharing of services is undeniably a very helpful aspect for ascertaining overall growth of the organisations. The big organisations are very sound in terms of resources as well as dominance in the market. For this reason, through this strategy the medium sized HAs can improve the skills of the employees and gradually can create trust as well as goodwill amid the consumers. Moreover, this strategic implementation furthermore would incredibly be helpful regarding the notion of obtain economies of scale for effective utilisation of the resources and developing the society. In the context of the UK in terms of solving the household crises, the landlords as well as medium sized HAs can acquire this strategy and integrate with the big organisations for effectively utilising the lands and solving the problem of housing crises (Chi & Yingde, 2006). Developing the Capacity With regard to developing the capability, the medium sized HAs also face enormous challenges regarding ensuring sustainable growth through reducing the deficits of the organisation. Capacity refers to the occurrence of challenges in terms of resources like human resource power, lack of skills and ability, unconstructive management process and financial instability among others. Therefore, concerning these challenges, the authorities of the medium sized HAs should be developing competitive strategies The medium sized HAs can reduce this issue through deriving valuable insights from larger HAs. In addition, the medium sized HAs also can take financial help from the government authorities as well as financial institutions. In this parameter, the government also should be concerned towards providing an effective base of growth through offering Financial as well as investment suggestions. The strategy of the joint venture unquestionably will be helpful for the medium sized HAs to increase the capability in the business and marketing operations. Besides, for the development of capability as well as skills in terms of effective utilisation of the resources the HAs in the UK can take suggestions of the g320, an illustrative body for smaller housing based associations across London. The organisation effectively provides help as well as training for the development of the medium sized HAs especially in the segment of household development (Martin & et. al., 2002). Takeover as well as Mergers The large organisations are likely to merge with the smaller ones for increasing the market dominance as well as sustainability. For the effective market capture as well as dominance by the large organisations, the medium sized HAs have been observed to facing a vital challenge in the market because they at times cannot compete with the large organisations in relation to availability of resources. Therefore, takeover of the medium sized HAs by the big organisations is a big risk for them. However, on the other hand, to reduce this vital challenge the medium sized HAs also can acquire the strategy of merger with the large ones. This strategy would help the medium sized HAs to fulfil the varied motives comprising the development of sustainable strategies, financial motives as well as managerial motives along with creating brand image. Sustainable strategy especially is focused on improving and developing the business as well as getting competitive advantages. Financial motives include the effective utilisation of the financial resources as well as providing best support to the stakeholders. Lastly, mergers undertaken by the medium sized HAs with the large organisations also can help them to develop their brand image as well as reputation in the market (New Town Abbey Times, 2013). Changing Government Rules and Regulations In relation to this concerning issue, the government of the UK has taken a valuable step to reduce the housing crises in this year i.e. 2013 through reforming the tax system. Regarding this aspect, Government of UK’s bedroom taxes commenced from April 2013 in which if a person has one extra bedroom then the owner has to pay 14% extra bedroom tax and if two or more then 25% extra tax (England Shelter, 2013). As per the changing rules and regulations, medium sized HAs are generally in a disadvantageous position as compared to the large organisations. Besides, to increase the Foreign Direct Investment, government also at times provides required help to the large foreign players. For this reason, the medium sized HAs of the housing development association of the UK face a strong set of risks as well as challenges in terms of competing with the large organisations possessing elevated level of infrastructure. Therefore, to mitigate this risk, the medium sized HAs in the UK can take the strategies of the service sharing, partnership business as well as joint venture with the large ones. These strategies significantly can support the medium sized HAs in terms of sustainable development through reducing financial challenges, human resources as well as preventing them from facing the changing government rules and regulations (England Shelter, 2013). Medium and Long-Term Prospective Designing appropriate business objectives along with setting up of the vision are amid the most important phenomena of the business for developing and growing in the business world. In the same way, the medium sized HAS also should take certain medium and long-term business strategies in this context for sustainable development. For dealing with contemporary challenges, the medium sized HAs belonging to the UK should take certain medium term strategies such as service share, joint venture and partnership among others. These strategies will be helpful for them in favour of attracting the shareholders through providing good returns. Besides, they will be also helpful to create a good image as well as increase the investment through share and bonds. Moreover, the medium sized developing HAs can take long-term strategies for expanding the business. Regarding this, they can remove the various challenges i.e. lack of finance as well as human resources through accumulated finance from the shareholders along with taking the government facilities concerning financial inclusions (Chi & Yingde, 2006). Case Study Example After accruing a brief idea regarding the risks as well as challenges that have to be faced by the medium sized developing HAs, certain strategies are provided with an aim to help this business segment. There are a large number of medium sized developing housing associations in the UK including Affinity Sutton, Bromford Housing Group, Derwent Living, Elim Housing Association, Tamworth Cornerstone Housing Association as well as Waterloo Housing Association among others. For supporting these associations, government also tends to provide various supports for reducing the market risks in the UK housing industry. In this context g320, as an illustrative body for smaller housing based associations across London is facilitating to provide necessary support to the medium sized HAs through training and development regarding improving the skills as well as investment strategies. Regarding the support of merger strategy, certain real life examples in UK include Abbeyfield House in Merville Garden Village and Bryans House in New Mossley that merged with two leading local housing associations, Abbeyfield UK as well as Wesley Housing Association respectively. Through this strategy all of the organisations have benefited enormously with regard to the present day scenario (New Town Abbey Times, 2013). Conclusion In relation to the present competitive environment in the UK housing industry, the potential risk areas for the medium sized HAs can be identified as a critical aspect which can significantly impact their overall performance. Additionally, the rapid development of the present UK housing industry also creates unabated risks from the competitive performance of the large and dominating HAs that significantly hinder the performance of the medium sized developing HAs to achieve their desired business goals and objectives. The discussion of this report encompassed different risk areas which can have an impact on the performance of the medium sized HAs in the present UK housing industry. In this regard, the organisations should highly prioritise to develop their business strategies and mechanisms to effectively deal with the potential challenges in the respective industry. Therefore, the proposed risk assessment and management strategies can ensure to provide adequate support for the medium sized HAs in order to efficiently address the mentioned risk areas. Moreover, the suggested business strategies associated with welfare reform, changing governmental regulations and financial support availabilities further ensure to protect the medium sized HAs from different internal and external constraints which can hinder the overall performance of the firms. Additionally, the provided case study examples of different medium sized developing HAs in the UK housing industry also demonstrates adequate measures in terms of addressing potential challenges emanating from different risk areas. In this regard, the case study examples also reveal the fact that there are different potential steps for this segment of HA which further can facilitate them to maintain the present growth prospect in the UK housing industry. References Badenoch & Clark, 2013. Stay Informed, Remain Competitive. News and Opinions. [Online] Available at: http://www.badenochandclark.com/en-GB/news-and-opinion/Pages/news-and-opinion.aspx#.Uam__dKB_mg [Accessed June 2, 2013]. 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Financial inclusion. The Voice of Housing Association. [Online] Available at: http://www.housing.org.uk/policy/investing-in-communities/federation-support-for-community-investment/financial-inclusion/ [Accessed June 2, 2013]. New Town Abbey Times, 2013. Staff and residents mark merger of local housing associations. News. [Online] Available at: http://www.newtownabbeytoday.co.uk/news/local/staff-and-residents-mark-merger-of-local-housing-associations-1-5032646 [Accessed June 2, 2013]. Somerville, C. T. & Mayer, C. J., 2003. Government Regulation and Changes in the Affordable Housing Stock. FRBNY Economic Policy Review, Vol. 9, No. 2, pp. 45-62. Stephens, M., 2011. Tackling housing market volatility in the UK. Introduction. [Online] Available at: http://www.jrf.org.uk/sites/files/jrf/housing-markets-volatility-full.pdf [Accessed June 01, 2013]. Read More