An Evaluation of Aussiehome.Com - Case Study Example

AN EVALUATION OF AUSSIEHOME.COM By KHADIZA AMIN Aussiehome.com i AN EVALUATION OF AUSSIEHOME.COM Executive Summary Aussiehome.com deals with real estate agents by providing them with attractively designed websites giving invaluable help by incorporating innovative ideas and comprehensive details about the development of plots; it also helps its clients by providing them with appropriate and unique tools to make the website attractive for different users of land. Stationed in Perth, it covers the whole of Australia and is among the three best firms in the oligopoly market. It has won coveted honours from discerning public bodies for its commitment and excellence in the chosen field. It takes pride in calling itself “Real Estate in Box” as it is able to cover many activities under a single canopy. Aussiehome.com ii An Evaluation of Aussiehome. com TABLE OF CONTENTS Page No 1. Introduction 1 2. Aussiehome.com – an overview 1 3. Dimensions of the Market 3 Value Creation 3 4. Cost Analysis 4 5. Market structure 5 6. Macro-economic analysis 7 7. Driving Force and Competitive Strategy 12 8. Conclusion 13 9. Appendices, Brochure 14 10. References 18 Aussiehome.com 1 AN EVALUATION OF AUSSIEHOME.COM Introduction Aussiehome.com is a real-estate services firm in Perth and its range of activities is really breath-taking and should be quite satisfactory to its clients. No wonder the spur given by the globalisation and modernisation have added to the value of real estate business. One of the immediate ventures in a sound economy is a flourish in building activities. Aussiehome.com has geared itself to meet all the challenges in the field in a very professional and efficient manner. In this presentation, we shall briefly cover its area of operations, how it effectively functions, meets challenges and also plans for sufficient expansion to stay ahead as one of the leaders in the business. Aussiehome.com – An overview Aussiehome.com is a firm operating from Perth which offers much help in giving shape and aesthetic look to the properties displayed by developers. It provides specialised services to the web-sites of developers. It undertakes “designing, building and maintaining customised websites.” It gives the developers a cutting-edge in extolling the present and potential assets of the properties and assures the developers a safe niche for exhibiting their products. By having hundreds of such agencies under its protective wing and care, Aussiehome.com has again under its single canopy a sweeping list of properties in the desired localities of the prospective buyers. Aussiehome.com 2 The fact that it has been instrumental in the sale of nearly 40,000 properties since its inception just in 1999, speaks a great deal about its commitment to its professional outlook. “The aussiehome.com property portal is packed with features and functionality, including: Fast real estate search with plenty of filter options; Interactive Google mash mapping with satellite imagery, hybrids and zoom to lot level Our own map search with pull-down text filters Suburb Price Charts (plot up to 5 at a time) Our own 'aussiehomehunt' technology to track properties for you automatically & weekly Buy Landgate past sales data Photo slideshows of every property Suburb profiles & photo.” (aussiehome.com – about us) It has its own special relationship with leading companies in the respective technological field to assure its clients the latest and the best in providing appropriate needs. It should be noted that aussiehome.com has special projects for apartments development, land estate development and even more interestingly, keeping in trend with modern times, schemes for retirement villages. These are indicative of the dynamic manner in which the firm is prepared Aussiehome.com 3 to proceed to cater to the needs of the ultimate purchaser of the desired property and the website operators. Dimensions of the Market Australia is one of the richest countries in the world, with a per capita income of nearly AUS$39,450. It has a population of barely 23 million and vast stretches of land to be utilised gainfully. Its exports and exports have improved and there is a sustained economic growth, relatively good atmosphere for activities in the field of manufacturing, trading, banking and expansion in education. The economy is buoyant and the present climate is excellent for real estate development and allied services. Value Creation The basic worth of a firm is recognised, appreciated and even admired or emulated on the basis of value it creates for its product or services. The idea behind value creation is among the identical products to sow in the minds of the consumer a perception to convinces him that the one he has chosen has certain advantages over similar products available in the market. This is due to the care with which the product is packaged or presented by the manufacturer to convince the consumer of the added value to the same. This is equally applicable to the services offered as well. It must be remembered that the stratagem of the provider of the goods or services so creates an impression of the superiority of the product or services offered gains for the firm loyalty and trust of the consumer. The systematic manner in which aussiehome.com has gone about in creating and sustaining the value for its services is commendable. It is not so much the picture Aussiehome.com 4 presentation, aesthetic matter presentation, guidelines to use the web or such minute details alone that have been proper attention. The whole concept of providing appropriate service to its client and ultimate buyers is deeply reflective of commitment to the firm’s business code and ethics. Here, in the services sector as well the manner in which aussiehome.com has been dealing with the concept is interesting. We have given at the charts and pictures section at the conclusion of essay the picture of a building which the firm projects as the ‘property of the week’. The apparently simple guideline speaks of the advantages that could be had by studying the property, its location, value and many inter connected ideas. This is a just a small illustration of the thought that had gone into giving a picture and a caption to it. While in the case of consumer goods this additional perception of value is created by wrapper, texture, advertisement, modifications in colour, shape and such minute changes, in the case of service the same has to come through effective manner in which the service presented is shown as superior to what the competitors offer. Cost Analysis “Cost analysis (also called economic evaluation, cost allocation, efficiency assessment, cost-benefit analysis, or cost-effectiveness analysis by different authors) is currently a somewhat controversial set of methods in program evaluation. One reason for the controversy is that these terms cover a wide range of methods, but are often used interchangeably.” (Meg Sewell and Mary Moorcock). In case of industrial products it would take into consideration the judicious blend of capital and labour intensive processes, the optimum labour force required to produce optimum output, the process of gathering inputs in a systematic manner to avoid wastage or Aussiehome.com 5 excessive stock etc. and at last the resourceful utilisation of inputs to have maximum outputs and thereby gaining more profits. In our present analysis of Aussiehome.com we have to note that effectiveness is had not so much by general inputs of an industrial firm but by very diligent application of certain tools to enhance the quality of websites of the clients, which in turn would attract the general public and spare them the necessity to go beyond this site for further elucidation in the value and other parameters of the property. The brochure of the firm itself notes that its “Unique features include: Individually-made web design (not just a home page with properties bolted on) Custom-made (not off-the-shelf) property searching and property Interactive Mapping - zoomable, satellite imagery, hybrid maps, travel directions HomeHunt (automated buyer-property matching system) & Property Alerts Search Engine Optimisation (get on top of google, yahoo! and msn) . (Some samples are given as Appendices) Market Structure There are only three major companies in this field. Besides aussiehome.com, realestate.com.au and domain.com.au. are the other two firms. There are, of course, a number of small firms everywhere but generally this structure can be termed as an oligopoly where these three big companies dominate business. Each company has its own control over a number of websites and strictly speaking pressure from peer-companies is less. But it must Aussiehome.com 6 be mentioned that this has not made any of the major players to be less vigilant or tardy in its approach towards the clients. Without exception the companies deal with rentals, outright purchases, sales, development of properties, land or buildings available for lease, auctions of properties, posh mansions, houses suitable for the retired and aged couples, etc. The sector also provides valuable information and guidelines to the web site owners and others interested in the development of properties regarding the possible economic expansion in the specific areas or other relevant information which would help them to decide upon the manner in which the land or structures could be utilized A new dimension has been added by permitting foreign nationals, subject to certain guidelines, to purchase properties in Australia. As has been pointed out by aussiehome.com, “Australia welcomes people living outside the country to purchase homes, apartments and property. Australian property is an easy asset to maintain from overseas. The Australian property industry is well experienced in assisting investors obtain property, then manage the tenants and look after the well being of their property. Government regulations ensure that Landlord and Owner Rights are protected and that the building is of the highest quality and standard. Most property in Australia is Freehold Title, meaning that it is owned and not leased.” Some important points in this regard given in the table annexed. If in property search, properties for sale, under auction, for holidays, for rentals etc. are separately listed out and categorised neatly, care is also taken under development to indicate the type of developments. As a result of such meticulous concern shown for the requirements Aussiehome.com 7 of the customers, the company has been able to generate and retain a certain amount of goodwill. The firm promotes web sites and offers advice to the developers valuable suggestions. The strength of the total staff is not much but they are a highly sophisticated and talented lot. As this is not a manufacturing unit some normal tools associated with analysis of the unit will not have much significance here. The vexing problems of acquiring enough raw-materials, the recruitment of temporary or additional manpower or whole sale changes in the shift system, etc. do not arise in this unit. Accordingly the costs are by and large fixed ones and it is enough if provision is made for marginal adjustments. The firm’s services to its clients are also charged usually at the time of initial contract itself and subsequent slight modifications as may be required by the clients do not much add to the overhead costs of the firm. The firm, however, has to maintain a highly talented team for its routine operations. As already noted while there are no barriers for any small number of firms to gain entry in the market the outstanding nature of these three companies is such that for all practical purposes the structure could be considered as oligopoly. Macro-economic analysis “ Macro economics is the study of economy as a whole and its aspects like economic growth and how business is affected by the changes in the economy.” (Layton, A., Robinson, E., Tucker, I.B. (2005)). Aussiehome.com 8 REAL GDP RATE OF AUSTRALIA . REAL GDP RATE OF AUSTRALIA (http://www.treasury.gov.au/documents/1190/HTML/docshell.asp?URL=10_review.asp) This indication of steady growth by itself does not forecast a boom. What is required to be understood is that the entire nature of the growth of Australian economy has been sound. With limited population and vast resources to be even more gainfully utilised, the economy does not suffer from any obstacles normally associated with developing countries. In this Commonwealth we have a very good infra-structure of education, transport, communications, health services and willingness on the part of the people to strive for better standard of living. Already it is among the economically advanced nations in the world and has a good consumerist culture. Aussiehome.com 9 There are more people living in urban areas in the rural settings in Australia. The standard of living is quite high. The longevity of life for an average Australian is nearly 79 years. (World Bank, 2003) The economy is sound in more than one sense: the government has been consecutively producing surplus budgets. There has been no cribbing on spending for education or public health care. Infra-structure, physical and human, has been getting a priority treatment in transport, education, communication and manufacturing sectors. (The Economy Watch) The manner in which household income is distributed also indicates a positive atmosphere for building activities. Sound economy and proper distribution of household income ensure that there would be no slackness in building activities, their promotion and all the allied business associated with them and in fact would pick up good momentum. We also find from the statistics provided by all the leading players in the market positive growth and fairly optimistic outlook for the future as well. This is not surprising from a different aspect: demographic factor had been a constraint in the economic growth of Australian economy during 1970s and early 1980s as at that time there was not enough manpower. That handicap has been since overcome by liberalising immigration rules and in the recent years in the human development index , a very exalted place, i.e., third place has been assigned Australia.(Economy Watch) Growth of economy, growth of surplus for increased basic housing facilities and growth of conscious attainment of material well being, all point out only to a sustained growth in this real estate sector. In fact when the Aussiehome.com 10 need arises to open up more rural areas and buildings for living and work spots and factories have to come up, the business in this sector will grow up by leaps and bounds. An economy gains momentum or loses its growth only when there are political disturbances and disorienting developments. In Australia, political stability has had a long history and all the parties are agreed on the advantages of globalisation and accordingly Australian Governments’ policies have aimed at enacting investor-friendly laws irrespective of the party in power. This has given a great stability to the economic growth. In fact apart from conducting some required and routine monitoring to prevent such practices as money-laundering, the successive governments have by and large not interfered with this sector much. (Real Estate Institute of Australia- response to government’s proposals regarding anti-money laundering checks). According to Government notification itself, “Australia has one of the strongest economies in the world—competitive, open, vibrant and flexible.” It has also pointed that “the International Monetary Fund (IMF) has commended Australia on the sound macroeconomic management and continuing structural reform efforts that have underpinned its sustained strong economic performance.” The oligopoly of the services to the real estate agents is not completely free from macro-economic considerations. But the nature of the Australian economy is growing in such a healthy dimension that taking other factors too, like growth in population and a flux in the incoming population, availability of resources, scope for enhanced performance in the export market and attraction for foreign direct investment, the real Aussiehome.com 11 estate business is likely to enjoy a boom for some more years to come. Cyclical, policy and structural risks normally associated with variables in macro-economic analysis are not likely to have much impact in the healthy growth of real estate business and service providers for them, viz. firms like the one under review. Perhaps to substantiate this claim we may point out some growth factors. GDP growth rates, Volume measures, quarterly change Contributions to GDP growth, Expenditure: Seasonally adjusted Aussiehome.com 12 The following gives a general idea about the forecast of growth in real GDP (http://www.budget.gov.au/2004-05/myefo/html/02_part_1_overview.htm) Driving Force and Competitive Strategy The foregoing account makes it clear that unlike economies in Japan, the US, Germany and Canada where despite maintaining an advanced level, there are many constraints arising from the pressure of population, trade difficulties, political turmoil and issues of international significance, Australia is relatively free to develop its own growth pattern. It is also fortunate that its geographical location and historical isolation contributed a great deal towards not much interference from international affairs even though in the recent times it has chosen to act as ‘partner’ for US. The Australian Aussiehome.com 13 government is also interested in having a dominant role in Asia-Pacific region and in the nearby islands. However, these do not interfere in the working of the domestic economy. The driving force, therefore, of the firm has to be its fierce commitment to enhance the value of services offered to its clients and maintain the competitive edge. The present Managing Director (and Co-founder) of the firm Mr.Charlie Gunningham with his dedicated team takes care of the vital requisites of the company in a very orderly, disciplined and commendable fashion. The competition is, as we have seen earlier, from two prominent companies and perhaps a way to go very much ahead of them would be to woo international investors. That is the one suggestion we can make because despite substantial local support for the various schemes of the firm’s clients, if an array of international investors were to be inducted into the field it would further add to the quality of the building and other infra-structure. The governmental guidelines in this area also are very favourable for the foreign investors and the local firms. Conclusion With greater emphasis on human development and when the need arises for conversion of vast rural lands into business and residential areas, the aussiehome.com is poised for a greater and even more constructive role in the national building – also in the quality of life Above all, the advantage lies with a sound economic and political stability in the country and a vibrant people willing to make most out of natural and human resources. Aussiehome.com 14 Appendix A photo from aussiehome.com displaying a property Vic Park Foreshore Suburb Profile: The suburb derives its name from "Victoria Park Estate", a development that took place in the 1890s. It is believed the name was given to the estate because Queen Victoria was still on the throne, although it may be connected with the Melbourne suburb of Victoria Park. It was finally declared a municipality in 1897. Aussiehome.com 15 An aussiehome.com displaying a photo of its property Aussiehome.com 16 A property shown in the website of aussiehome.com ------------------------------------------------------------------------------------------------------- A Government brochure on foreigners investment: Foreign nationals can buy: New Property Residential Projects or Apartments – up to 50% of the total project can be purchased by foreign nationals. See "City Living". Vacant Land - only if construction begins within twelve months of purchase. See our list of vacant land. Aussiehome.com 17 Established Property - only if an additional amount of no less than 50% of the original property cost is spent on improvements, or additional construction (consent of the FIRB is required). Commercial Property - under AU$50M Status Buying Guidelines* Australian Citizen or Permanent Resident No Restrictions Temporary Resident, Retiree or Student Can buy new property without restriction or an established property provided it is your residence and it is sold when your visa expires. Consent of the FIRB is required. Foreign National or Foreign Corporation Can buy new property. Can buy vacant land as long as building commences within 12 months of purchase. Can buy an established property only if an additional amount of no less than 50% of the original property cost is spent on improvements or additional construction. Can buy up to 50% of new projects or apartments, Consent of the FIRB is required. Commercial Property under AU$50M No Restrictions to Foreigners. Some Rules apply. Aussiehome.18 References 1. aussiehome.com, website of. – about us 2. aussiehome.com, website of, Perth and WA 3. Australia Economy, Economy Watch—Social Economy Indicators 4. Australian Govt. Department of Foreign Affairs and Trade – A competitive Economy 5. Australia – Distribution of Family Income, Index-mundi 6. Australia.govt. au 7. Property in Australia – Australia Home 8. Australian Bureau of Statistics, National Income, Expenditure and Product Sept.2006 9. Real Estate Institute of Australia, Memorandum to Government, 2nd August, 2007. 10. National Accounts, Statistics Directorate, Australian Govt. 20.9.2001. Read More