Strategy to Enter International Markets for Weichert Realtors - Case Study Example

? Business Proposal for Weichert Realtors to Enter the International Market Brief History Weichert Realtors was founded around the year 1969 in a humble setup comprising of a single office. The company has grown over the years and has expanded in to becoming one of the largest and major providers of home affair related services. During the course of their handling of business, the company has realized that many people develop a very emotional corner with the process of buying their individual homes, rather than visualizing the entire process with a simple financial investment of the future (Profile – Jim Weichert). As a result, the company has developed a wide array of services, which focuses on providing a high level of convenience to the customers with the process of buying their dream shelters of the future. The company’s broad mix of product and service offerings comprises of the processes of buying, selling, arranging for open houses, mortgage processes. The company, by maintaining a dedicated team of housing experts focuses on the process of providing solutions to mortgage issues, as well as providing housing recommendation and advices to the customers (Weichert.com). Talking about the company’s area of operations, it can be said that the company is currently focused on providing operations to key markets in the United States. The company in all their business related affair handling focuses on the process of giving high importance to their customers. With the passing of time, the real estate company Weichert Realtors has focused on the process of providing high level of customer satisfaction to the consumers. As of today, the company has become a major player in the housing segment and has developed a high level of expertise for representing the best homes in the community. The company through the process of conducting their highly popular home marketing programs has achieved a great deal of success in the process of being able to get identified by the customers in the fastest and quickest manner. Global Real Estate Market The real estate market around the world has been through a tremendous amount of growth phase in the early part of this decade. The growth phased continued till the subprime crisis in the United States in the year 2008 triggered a tremendous global slowdown which led to a significant amount of reduction in the growth rate of this sector all over the world. In an effort to tackle the global recession, banks all over the world increased their lending and interest rates, thereby making large amount commercial loans costlier than before. Also, the companies around the world focused on achieving significant cost reduction, thereby slowing or delaying their large scale investments as well as laying off extra staff from their payrolls for the purpose of attaining sustainable growth rate at that time. However, with the easing of pressures in relation to the global crisis, the real estate market around the world started to regain its luster. Talking in terms of market capitalization, the global real estate industry achieved a growth of over 2.5% and reached a capitalization value of around $544 billion in the year 2011. As of the data gathered in the recent times, Europe dominates the real estate market around the globe, with around 36%, followed closely by America at 35% market share. The real estate market comprises of around 20% of the entire global real estate market, while the rest of world comprises of the remaining 9% (“Prestige MLS Luxury Real Estate”, 13). Talking in a more specific manner, it can be said that the there are a wide range of demand based factors that significantly influence the individual real estate demand in various parts of the world. In the cities like Paris and Moscow, the main factor that pushes the demand for the real estate market is the lifestyle and prestige related needs of the masses. In terms of cities of the Asia Pacific region like Singapore, Hong Kong and Mumbai, the demand is triggered in regards to investment needs of the masses. The population of London, Sydney and New York see the process of making real estate investment as a means to achieve education, business as well as security for the future (“Prestige MLS Luxury Real Estate”, 17). Source: “Prestige MLS Luxury Real Estate”, 2012. In terms of market prediction, it can be said that the global real estate industry has been forecasted to achieve 2.8% compounded annual growth rate as compared to the year 2008, and reach a total market capitalization of around $576.9 billion (“Prestige MLS Luxury Real Estate”, 13). Talking in terms of the nature of real estate needs across various markets, it can be said that the developing as well as the developed markets like the Asia Pacific, United States and Europe needs significant real estate developments in the arenas of residential areas, offices, retail areas, logistics warehouses as well as parking lots and hospitality sector (Pellenberg and Wever, 122). Strategy to enter international Markets It can be said that the international markets of various developing and developed economies provides the perfect opportunity to various real estate companies to attain a sustainable level of growth rate in terms of the future. In an attempt to enter the international markets, the real estate companies can focus on employing a wide range of strategies which comprises of choosing the right target market as well as designing the right strategies that will help the company to the process of entering the selected market. Focusing on forming joint ventures Many companies of the real estate sector, in an attempt to enter new real estate markets located in various countries around the world, focus on the process of forming collaboration or a joint venture with a small or medium sized real estate company that is originally existent in the market that the company is targeting to enter. The process of entering in to a significant collaboration with an already existing company in that particular market helps in the process of bypassing of various trade barriers and other laws and policies that are implemented and set up by the local government to restrict foreign competition in the real estate market of that country. This process of entering of new markets by forming joint ventures also helps in the process of developing the new market for prospective opportunities in the upcoming future, by making significant financial investments in the joint venture. Takeover of existing real estate companies A strategy that is often used by various international real estate companies, with cash rich pockets to enter the new markets around the world is to go for a takeover or acquisition of a locally existent struggling real estate company in that market (Swayne, Duncan and Ginter, 2012). Employing this strategy provides a significant amount of benefits to both the parties involved. For the acquiring company, the acquisition bid will significantly help in the process of entering the new market of that region that promises significant amount of future growth. On the other hand, the acquired company will get the much needed finances to restructure its business interests and portfolios and thereby lead to the process of ending the cash strapped situation of the company, and thereby enabling the company to mobilize its various functionalities, divisions and services in a fresh manner. Acquiring stakes in real estate companies A very important strategy that can be utilized and implemented by international real estate companies in an effort to significantly enter a new market, which is located in a new country or geographical location, is the process of acquiring ownership stakes of small amounts in various local real estate companies of the new country. By the process of acquiring stakes in a locally existing real estate company, the international company dealing with the real estate sector will be able to make significant contributions in the decision making process of these companies and will as a result, naturally gain a lot of insights and exposure in regard to the trends, practices and methods that are existent in real estate sector of the newly entered country. Forming Public Private Partnerships (PPP) A very effective strategy that can be used by the real estate companies of international origin to enter into a new market is to focus on the process of forming a public private partnership with the local government for the purpose of developing the public infrastructure of the company. By the process of doing that, the company will be able to make significant amount of investments and gain presence in the new country, while deriving various policy related benefit as well as significantly gaining the trust of the government and the public.. This will automatically provide a great deal of leverage to the company and will lead to the widening of the international companies’ opportunity to foray into the private infrastructure market that is existent in the various geographical regions of that country. Investing in the Hospitality Sector A strategy that can be used by an infrastructure company in an attempt to enter a new market which is located in a developing or a well established economy is through the process of investing and developing the hospitality sector of that region and even venturing into hospitality sector in that particular region (Dixon and et.al, 298). The real estate company can concentrate on the process of building hotels, spas, tourist resorts in various hot spot locations of the new market. Through the opening up of an hospitality management wing of the company in the new market, the company will able to look after the administrative side of the hospitality developments, which will automatically lead to the process of opening up of a revenue stream for the company. It can be said that through the process of employing this particular strategy, the real estate company will be able to make their presence felt in the new market, which will automatically provide them recognition amongst the consumers and target audience located in the new market. In a later move, the company can look forward to the process of diversifying its business interests in the new market and can move towards entering the real estate sector of that market by making significant and large scale investments (Nuyen, 1-7). Building Commercial Spaces in New Markets A very effective strategy that can be used by real estate companies of international origin in an attempt to enter a new market is to focus on the opportunity of entering into agreements with local small scale real estate companies. This entire strategy to enter the real estate sector in the new geographical location will be multi tiered in nature. The first step of the agreement should focus on the process of making significant amount of financial investments in the company, thereby providing the local company with a large amount of financial power to go for large scale commercial developments in various emerging hot spots in the new market. The next step of this strategy will comprise of the process of encouraging and motivating the local company to go for aggressive bidding on government as well as private developments of large spaced commercial areas like retail spaces, commercial complexes, warehouses and even parking lots. By employing this strategy, the company will start to gain a significant foothold in the commercial division of the real estate market that is present in the new region. The next step of the strategy should comprise of the process of the company focusing on diversifying its real estate investments from the development of commercial spaces to the process of making significant amount of investments in the development of large scale industrial projects like development of industrial parks, Special Economic Zones (SEZs) as well as high traffic industrial corridors. The next part of this multi tiered strategy will comprise of the process of acquiring the local company through a strategy of formal market entry. The last part of the strategy will comprise of the diversification of service offerings of the newly acquired company and venturing into development of residential category real estate in the new market. Works cited Prestige MLS. Prestige MLS Luxury Real Estate. France. 2012. Print. Pellenbarg, Piet H. and Wever, Egbert. International Business Geography: Case Studies of Corporate Firms. Canada: Routledge, 2008. Print. Nuyen,David. The Tao of Real Estate: Investing With Confidence. USA: NuMax Reins.2004. Print. Swayne, Linda E, Duncan, W. Jack and Ginter, Peter M. Strategic Management of Health Care Organizations. England: John Wiley & Sons. 2012. Print. Dixon and et.al. Real Estate and the New Economy: The Impact of Information and Communications Technology. USA: Blackwell Publishing. 2005. Print. “Weichert”. Weichert. 2012. Web. 7 Dec. 2012.. Read More