Sussex and Reilly Residential - Essay Example

Name Course Lecture Date “Sussex and Reilly Residential” History In 1991, a young, ambitious man known as Sean Colon made an arrival in the United States of America in search of greener pastures. He landed a job as a janitor while studying real estate in evenings. After working as a janitor for some time, he quit his job in 1993 and joined a small company in Chicago. It’s during his working days in this firm that he noticed a new trend where abandoned towns began accommodating prosperous professionals unlike previously where inner cities were termed as non-existent market (Martinez, 37). These wealthy professionals demanded luxuries constructions that were new in the market leading to a higher demand for modernized buildings. As Conlon was busy marketing his constructions to the high-class population, he broke the Chicago sales records with 55$ million. During the year 1997, an average agent could only make 5$ million annually. This was a significant success to Conlon as his strategies proved the best in meeting the new demands for property. Unlike before where people in Chicago could build small flat buildings, Conlon came up with the idea of constructing three flat buildings and selling them at high prices since there was no precedent before (Martinez, 37). Conlon target market was the young, wealthy professionals with great love for city fun. This demanded embracement of technology that could create a well-organized relationship between the agents and clients. After a few consultations, he managed to link up with an entrepreneur who owned a unique buyer agency. They both formed Sussex and Reilly in January of 2000 (Sussex and Reilly was derived from the maiden names of the partner’s mothers) (Martinez, 37). Managing the new firm was not that easy to Conlon, and it prompted him to contact Glen Tomlinson who was Mergers and Acquisitions for Cendant Corporation manager. Tomlinson believed that, the new kind of business demanded some expertise and organizational skills for it to prosper. That means, to achieve high goals; another entrepreneurial person had to come through. Scheffler was the ideal person to marsh in his 18 years of experience and success in the company (Martinez 37). It was in 2002 that the three entrepreneurs become partners, and Tomlinson become the first General Manager. The partnership gave a new face of expansion for Sussex and Reilly (Martinez, 38). Development With the aim of making Sussex and Reilly a dominant firm in the city, the company came up with a strategy goal of increasing its market share from 3% to 5% in a period of two years. Having put in place the idea of using technology to woe more clients, their competitors were in development of websites created to connect both sellers and buyers. The move demanded a wise approach so as to attain their both short-term goals and long-term goals (Martinez, 32). The company managers had first to understand their market target and the availability property available. About 96,000 of owner-occupied properties, 9,600 of the total were always on sale at any given time. A good house of one bedroom priced at $200,000 while a four bedroom and 6 bedrooms priced at $4 million. This automatically meant that, the people who were interested in these kinds of houses were to a greater extent rich. They were young and highly educated; most probably in their thirties (Martinez, 32). Sussex and Reilly managers had swallowed the fact that, most of the demographics in earlier Chicago had put more emphasis on individual managing of property rather than hiring an agent. Some had their family and officials trusted to assist in buying and selling off their properties (Martinez 36). Having learnt this trend, the Sussex and Reilly managers opted to “High Tech” an idea developed by Conlon. Technology was to come in and play the second role of facilitating and improving the agent/client relationships. This explained the need to hire young, ambitious, self-motivated individuals with considerable technological skills. The diversity of these young men was meant to help in catering for the different broad range of ethnicities working with the developing company (Martinez, 34). Growth of the Company over time Like any other company, Sussex and Reilly plan of action was to grow day after day. In between April and July 2007, the company’s managers discussed on how the company could achieve a short-term goal of 5% market share growth and a long-term objective of achieving 15% market share by 2013 (Martinez, 32). One bridge that could have facilitated the realization of their dream was the use of the latest technology that they used to disseminate information hence attracting more clients (Martinez, 34). This strategy led to a vast growth of the company and success was evident with an additional increase of 250 agents and four offices from the initial 55 agents and two offices. The company primary agenda was to become a dominant firm in Chicago suburbs serving developers and commercial clients in Chicago (Martinez, 32). Industrial Identification; Strategic Group and map(s) Pastel Analysis Political factors: The political scenario matters greatly in the real estate industry. Outbreaks of political unrest or inflation can mostly fail a business. The competitive pricing from other players was something to worry. The managers had to meet all the requirements expected by the regulators. In United States of America, real estate’s business wee regulated and e monitored by the states governments, which meant that each of the 50 states had different regulations. There were several tests that were to be passed for individuals to obtain a license such as educational requirements. In all real estate transactions, licensed practitioners were legally allowed to act as intermediates between sellers and buyers (Martinez, 32). Economical: The economic downturn in 2008 plagued the economy and demanded restructure the marketing and sales strategies in order to maximize their sales effectively. Sussex and Reilly had to expand its geographical influence as neighborhoods were in the process of gentrification. By so doing, the firm realized that more than 10% of Chicago properties were in the market at any particular point in time (Martinez, 38). It’s important to note that, economic conditions by then had a greater influence in any business regardless of its nature. Sussex and Reilly to a larger extent depended on the young, vibrant Chicago residents who were in love with luxurious condos (Martinez, 38). Social: Social factors played a big impact on Sussex and Reilly, as Chicago’s 70% of houses were rentals, and this meant that, more young residents were likely to live in the area (Martinez, 38). Sussex and Reilly had to communicate its image as a firm willing to offer its services to the young and educated youths. According to Census Bureau, most of the populations in these areas were single and white. They were in their earlier thirties with only a few married couples. They comprised of African Americans, Latinos, and Asians (Martinez, 38). The social implications were seen during their marketing campaigns that the firm carried online through the internet. Better known as “High Tech, High Touch” was to create a mutual relationship between the sellers and the buyers. Sussex and Reilly had, therefore, to keep with this psyche in order to cash in on the opportunity (Martinez, 34). Technology: With how the young population of Chicago was utilizing the technology, Sussex and Reilly had to develop a means of meeting their clients online. Conlon developed principal of High Tech played a significant role in liaising the agents/clients and the buyers through the internet (Martinez, 34). Legal: Legal implications were evident during the setup of the Sussex and Reilly firm. Real estate companies were forbidden from entering into any legal agreement that would create any particular commission price. Agents and brokers opted to a locally established informal consensus that regulated a relatively fair commission. For example, in Chicago city, commissions were about 5% while in suburbs, they slightly higher to 7%. They used a common contract known as Exclusive Right to Sell which the client and the seller agreed to pay the commission to the agent regardless the sale resulted from the agent's efforts or not (Martinez, 33). Environmental: The only major problem known to harbor real estate industry is weather issues like winter and heavy rains. SWOT Analysis: a) STRENGTHS Nationally known and offers the best in Chicago state (Martinez 32). Effective relationship between clients and agents (Martinez 38). b) WEAKNESSES • Largely dependent on internet to connect the sellers and buyers (Martinez,. 34). • Natural disasters (Martinez, 33) • Business policies that limited non-registered agents (Martinez, 34). c) OPPORTUNITY • Expansion to the far end of Chicago suburbs (Martinez, 34). • Sale of condominiums e.g. Six-bedroom mansions (Martinez 34). • Innovations e.g. the use of technology (Martinez, 34). d) THREATS • Economic conditions in US could reduce the purchasing power of customers (Martinez, 38). • Many incoming business entrants could lead to small profits (Martinez, 36). • Real estate’s prices are subject to significantly volatile (Martinez, 33). 5. Corporate Level Strategy Identification • Luxury brand -modern houses with more than four bedrooms (Martinez, 32). • Niche- targets a particular group of the population. The firm targeted the young educated youths (Martinez, 38). • Cost leader- Sussex and Reilly positions its self as Chicago company offering cheaper real estate services than their competitors (Martinez, 36). • Mass market- the firm operates in both Chicago city and its suburbs providing both cheap and expensive houses (Martinez, 38). 6. Business level strategy Sussex and Reilly used an approach of Identifying Market Niches in Chicago. Sean Conlon made a review on acquisition of properties in Chicago before indulging in the real business. He made sure that the investments made would be worth the returns. It meant that, the company could in many years remain flexible and always meets the client’s tastes and the world changes (Martinez, 32). 7. Company Structure and Control System: Sussex and Reilly firm are seen using the Functional Structure form of control. Tomlinson and Scheffler were both good in their area of expertise. Sean Conlon was also an expert in the real estate industry. It was evident then; the firm’s success was a product of grouping people in line with their skills and expertise so as to deliver quality work (Martinez, 33). 8. VRIN TEST • Valuable- Sussex and Reilly create a value-creating strategy that makes sure the firm remains relevant in the market and makes massive returns worth the investments (Martinez, 38). • Rear- in Chicago, only a few companies offered the real estate services by then. Meaning Sussex and Reilly was one of the rare companies in a strategic less competitive industry (Martinez, 36). • In-imitable- looking at Sussex and Reilly as a business, it happened to strategize its operations in a way that it was unduplicatable (Martinez, 36). • Non-substitutable- this was inevitable as many entries of real estate companies were coming in (Martinez, 33). 9. Recommendation for feasibility of implementation • Economic analysis After Conlon had discovered that wealthy professionals were coming back from the suburbs and nearing the city, he decided to create an opportunity to meet the supply of residential facilities. In 1996, USA experienced a job growth drop that implied that, many people were disbanding their residential homes. Between 2006 and 2009, foreigner’s settlement in Chicago became rampant e.g. Asians and Latinos made Chicago a home away from home (Martinez, 38). • Market analysis Geographical and demographic characteristic is what defined Sussex and Reilly target market. “The City” was a slang name referring to downtown of northeast Chicago. With over 320,000 housing units, 10% of them were always in the market at any given time (Martinez, 38). Technical analysis “High Tech, Touch Tech” was one of the tools used by Sussex and Reilly to primarily disseminate information between clients and agents. Technology was an essential need to the company due to its demographics and proper relationship between the two parties (Martinez, 34). • Location analysis The area that Sussex and Reilly covered had around 96,000 owner-occupied properties. It implied that there was a vast space for expansion and construction of social amenities to cater for the residents (Martinez, 33). • Manpower Analysis With exceptional skills and experience from Tomlinson and Scheffler, Conlon believed his company could achieve the American dream. In that case, the company employed over 250 young employees who marched their target client’s needs (Martinez, 32). • Financial analysis The “luxury” market for the firm had to dig dip from their pockets in order to meet the company’s expenditure as well as make its profits. A condominium priced at $200,000 and $4 million for a six-bedroom house (Martinez, 38). • Sensitivity and risk analysis It was vital to Sussex and Reilly to calculate the risks in their firm. At a particular time, Conlon discovered that, in a period of two years the business was at a standstill. This called for proper new strategies to deal with the opponents (Martinez, 38). Works cited Martinez, Martha A. 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