Strategic Management of Real Estate Firm

Subject :Strategic Management in Real Estate g g

Developer Firm in Ahmedabad

Prepared By - SONI VIRAL S.CP 1507

Guided By - Prof. Dhaval Mehta

CEPT University, Ahmedabad.M.Tech Construction & Project Management By- Viral Soni, MTech Construction &

Project Manageent, CEPT University, Ahmedabad

Strategic Management can become a critical Strategic Management can become a critical success factor for success of firm in longer run & needs special attention to be given.

Unlike other industry construction industry y yposses complex business structure, hence direct implementation of strategic management

hi h i d bli h d which is proven and established; may not ensure desired results.

By- Viral Soni, MTech Construction & Project Manageent, CEPT University,

Ahmedabad

To identify the current strategies followed in To identify the current strategies followed in construction industry.

To formulate alternative strategy to overcome bottlenecks and to identify action required for y qimplementation of proposed strategy.

To suggest actions required to implement the proposed strategy.


Ahmedabad


Ahmedabad

Strategy – A Strategy is a long term plan of action designed to achieve a particular goal as differential from tactics or immediate achieve a particular goal, as differential from tactics or immediate action with resources at hand.

Strategic Management – It is the process of specifying an g g p p y gorganization’s objectives, developing policies & plans to achieve these objectives, and allocating resources so as to implement the plans. It involves development of mission and strategic vision. It is long run in the nature and provides the organization with a road g p gmap.

The term Strategic Management is used synonymously with the term strategic planning The latter term is more often used in the term strategic planning. The latter term is more often used in the business world, where as the former is used more in academic world. The purpose of strategic management is to exploit and create new and different opportunities.


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Strategy Formulation – It is the process of Strategy Formulation It is the process of determining appropriate courses of action for achieving organizational objectives and there by accomplishing organizational purpose.

Strategy Implementation – It involves the method by which strategies are organized or

d i hi h i iexecuted within the organization.


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According to Chinowsky & Meredith, Technology, communication and market advances are fundamentally changing the global perspectives of time distance and changing the global perspectives of time, distance and spatial boundaries. Two decades ago organizations could identify themselves as local, regional, national or international in scope and expect local, regional, national or international in scope and expect that these definitions were clearly defined. However these boundaries were blurred to the point where any organization can theoretically participate in a design or construction of any project anywhere across the globe construction of any project anywhere across the globe. More over the problems of excessive employee turnover, stiff competition and company loyalty are changing at pace that has not previously been encountered in postindustrial that has not previously been encountered in postindustrial times. Chinowsky & Meredith also referred to three issues which demands need of strategic management in construction organizations knowledge workers, new markets and information technologymarkets and information technology.


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According to shah, the number of variables to be id d i h d i i ki i considered in the decision making process is

increasing. Production and other management systems and related technologies become obsolete within a short span of timeshort span of time.More reliance to be placed on creativity, innovation and new ways of looking at the organization in the world we exist Strategic management sets the major world we exist. Strategic management sets the major direction for the organization i.e. mission, major products, services to be rendered and major market segments to be served. gThe strategic management is the major vehicle for planning and implementing major changes an organization must make. g


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Concept of Strategy :

According to Langford & Male, management theorists agree that strategy deals with the means and organization uses to meet ends Traditionally it has been seen viewed as a set of meet ends. Traditionally it has been seen viewed as a set of rules to guide decision makers about organizational behavior. Strategies may be explicit or implicit, may remain within the senior management team or spread across the g porganization and produce a sense of common direction or purpose.

A di t Chi k & M l t t i d fi d th According to Chinowsky & Male, strategy is defined as the underlying concept that responds to, or anticipates, industry conditions for the purpose of developing long term plans.


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Concept of Strategic Management :

Strategic Management in the context of the construction industry comprises the following seven areas:

Vision, mission and goals – The starting point for all organization endeavors; establishing a vision provides each members with a direction to follow in all business practicesmembers with a direction to follow in all business practices.

Core competencies – The Business boundries for an organization does best and where its strength residesorganization does best and where its strength resides.

Knowledge Resources – The Combination of human and technology resources that provide the backbone for gy pcompleting organization projects.


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d A h f d f lEducation – A Focus on the information and formal requirement for lifelong and understanding of evolving business conditions.

Finance – A broad focus on monetary concerns beyond the project Finance – A broad focus on monetary concerns beyond the project to project concerns of budget and schedule control.

Market – The analysis of expanded business opportunities within d i h l d idomains that are related to core competencies.

Competition – A focused analysis and understanding of existing, emerging and future competitors in both existing and potential emerging and future competitors in both existing and potential market segments.

Strategic Management can be pictured as a series of above i hi ll segments within an overall structure.


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According to Oluwoye, Crawford and Faniran, g y , ,Strategic planning is the process of establishing long-term corporate plans for achieving them

ithi th ili i t within the prevailing environment. The typical Strategic planning process in construction firms consists of: defining corporate construction firms consists of: defining corporate objectives, conducting internal and external appraisals of company’s business environment, ydeveloping a strategic plan, Implementing the strategic plan, monitoring the plan during the implementation and reviewing where necessaryimplementation and reviewing where necessary.


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Establish Corporate Objectives

Monitor and Review Plan

Conduct internal Appraisal of firm’s strength and weakness

Conduct External Appraisal of threats and opportunities in firms business environment

DevelopDevelop

Strategic Plan

Implement Strategic PlanBy- Viral Soni, MTech Construction & Project Manageent, CEPT University,

Ahmedabad

According to Langford & Male, Innovation is one of the key issues in sustained competitive advantage Forms & Methods of in sustained competitive advantage. Forms & Methods of construction are largely in the hands of the designers.

Designers provide the spatial and structural form, specification g p p , pand drawings that impact the production process through buildability. However, the introduction of new material does not rest purely with designers and is very much dependent on procurement method and contractual arrangement chosen.p g

Innovation in Construction plant, forming part of the technical system in the production process, rests with equipment manufacturers and lies outside the industry However the choice manufacturers and lies outside the industry. However, the choice of plant and the manner in which it is deployed in site


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The primary areas for direct innovation withcontractors are:

On site level through the organization of production. Where h i id bl i l f f b i i ff i there is a considerable potential for pre-fabrication off-site

the contractor has to consider the timing and scheduling of these inputs together with how they might be fixed within the structure through the correct choice of craft skill.the structure through the correct choice of craft skill.

At Company level by responding to client with new services and new forms of corporate organizational design.p g g

In Financial Management.


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Types of InnovationTypes of Innovation

Technologies InnovationTechnologies InnovationOrganizational Innovation Production InnovationProduction InnovationProcess Innovation


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Barriers to innovation and learning

According to Turner, There are many barriers to innovation and learning forany organization.

Competency TrapsFear of failureFear of blameFear of innovation stealing by competitorsFear of innovation stealing by competitors

Rigid control procedures block innovation :

Following rigid procedures in construction industry acts as block toinnovation.

Rigid evaluation criteriaRigid resource utilization Rigid resource utilization Rigid control


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According to Teague, A dynamic vision and a well definedstrategy will count for nothing if execution is lacking; Change isabout execution. Successful companies do not strategize theircompetitors, they over execute them.

strategy if not implemented properly then holds no value to the firm. Implementing strategy falls into two categories:

Those strategic elements that relate to ongoing operational issues – how many of which product can be sold, how customers should be handled and so on andcustomers should be handled and so on, and

Those strategic elements that relate to how things should be changed – which amount to ‘projects’ in one way or anotherchanged – which amount to projects in one way or another.


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Formulate

Strategy/

Vision

Establish Business As Usual (BAU) Targets

Vision Define Obejctives/ Goals

D fi hDefine change Initiatives/ Deliverables

Establish Strategic Priorities

Prioritised Project Portfolio

Establish dependencies & Constraints


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Construction Industry specific strategies(According to Indian Context) is to be identified by evaluating suitability of various strategies followed by to be identified by evaluating suitability of various strategies followed by other industries, current strategy followed by Industry is also to be explored

Barriers to strategic management in construction industry & reasons for Barriers to strategic management in construction industry & reasons for failure of most of organizations in order to achieve effective implementation to be explored.

Work plans with responsibility matrix are to be drawn down in order to Work plans with responsibility matrix are to be drawn down in order to implement indentified strategies.

Evaluation Criteria are to be identified for each implementation step of strategicstrategic.

Impact of strategy on overall organization & its efficiency in order to achieve defined mission of firm is to be evaluated.


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Chinowsky, P. and Meredith, J. (2000), “Strategic Management in Construction” Journal of Construction Engineering & Management (Jan-Feb 2000) pp 1-9.of Construction Engineering & Management (Jan Feb 2000) pp 1 9.

Kale, S. and Arditi, D. (2002), “Competitive Positioning in United States Construction Industry” Journal of Construction Engineering & Management (May/June 2002) pp 238-246.

Langford, D. and Male, P. (2001), “Strategic Management in Construction” ,2nd edition, Blackwell Science, UK.

Oluwoye, J., Crawford, L. and Faniran, S. (2005), “Strategic Planning Practices in y J ( ) g gConstruction Firms” NICMAR JCM (July 2005) pp 172002-172015.

Teague, T (2005), “The Gulf Between Strategy Project and Reality” Project Manager Today (February 2005) pp 14.

Turner, J. (2005), “Barriers to Innovation and Learning” Project Manager Today (May 2005) pp 12-14.


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Ahmedabad

Identify The Present Strategy Objectives Analysis

Is the Strategy OK?

Yes

Generate Alternatives

No

Evaluate and Choose The Future Strategy

Repeat ChooseFuture Strategy

ImplementImplement

Review the Results ImplementationImplementation

Strategic Management Process


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Company Mission

What is

What is PossibleWhat is Possible

External Environment

Operating Env.

Company Profile

Desired

Strategic analysis and choice

Long Term Objectives Grand Strategy

Feedback

Feedbackong Term Objectives Grand Strategy

Annual Objectives Operating Strategies

Policies

Feedback

Institutionalization of Strategy

Constrol and evaluation

Strategic Management Model


Ahmedabad


Ahmedabad

Land Proposal

Check the legal papers and search report through

If Prima facie promisingA id No

Any idea of joint ventureyes

Avoid the Deal

Technical feasibility

Market Research

Source of funding

Is project worthwhile?

Finalize the type of Project

Focus on price people Acceptance of proposal

Feasibility of the Project


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Ahmedabad

May 1984: With no capital in hand Mr. Jain migrated to Delhi and started as a broker for property selling of some established names started as a broker for property selling of some established names. He also learnt and assisted these companies in assembling land parcels. Having understood the finer norms of housing business Mr. Jain started Parasnath and Associates Pvt. Ltd.

Parsvnath Developers Limited is one of India’s leading real estate developers with an experience of more than two decades in offering state-of-the-art development and construction.g p

Over the past two decades, Parsvnath Developers Limited has emerged as one of the most progressive and multi-faceted real estate and construction entities in the country Through the years estate and construction entities in the country. Through the years, Parsvnath has stayed truely commitmented to `building a better world’ by transforming barren tracts into landscaped green belts housing world class commercial, residential and recreational properties properties.


Ahmedabad

Parsvnath is a company whose business philosophy lies in the commitment to creating architectural marvels using state of thecommitment to creating architectural marvels using state-of-the-art technology and global architectural, construction and business practices. Parsvnath is passionate about providing cost-effective and holistic solutions for our customers while creating and adding value for their partners and stakeholders Our unwavering focus value for their partners and stakeholders. Our unwavering focus on these factors catapulted Parsvnath Developers Limited into the top echelons of the Indian Real Estate and Construction Industry in 2007.

With a pan-India presence in over 51 cities in 18 states, Parsvnathis steadfastly focused on continuing to create and build dreamspaces that transform lives and the world around them – be pit through contemporary residential spaces, state-of-the-art office complexes, luxurious shopping malls and hypermarkets, posh hotels, futuristic multiplexes, and ultra modern IT Parks and special economic zones.p


Ahmedabad

Savvy Group of Companies consists of Savvy I f Li i d S C i Infrastructure Limited, Savvy Construction company, Savvy Infrastructures Company, Savvy Homes Co.,Savvy Organizers and Savvy Realty and Infrastructures Pvt LtdInfrastructures Pvt. Ltd.

Savvy takes pride in the Buildings it builds, so the u t m r r pr ud t b p rt f S Gr up f customers are proud to be a part of Savvy Group of

Companies.

S G f C i i h b i hild f i Savvy Group of Companies is the brainchild of its Directors Jaxay Shah, Sameer Sinha & Jigish Shah; three classmates from engineering college who had a dream to change the landscape of Ahmedabaddream to change the landscape of Ahmedabad.


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After graduating from L. D. College of g g gEngineering, all three gained valuable experience working in brick and mortar construction companies both in India as well as abroad, before

i h ‘S ’ i 1996returning home to set up ‘Savvy’ in 1996.

Savvy Group of Companies was conceived as a Savvy Group of Companies was conceived as a professional construction company to satisfy the needs of the discerning customer interested in prime commercial or residential space. Within a prime commercial or residential space. Within a decade Savvy established a strong and reliable reputation in the densely saturated construction market of Ahmedabad.


Ahmedabad

Discription/Discription/Company Parsvnath Developers Savvy Infrastructure

Head office Delhi Ahmedabad

B h Offi H d b d G Ch di h J Branch Offices Hyderabad, Goa, Chandigarh, Jammu, Ahmedabad, Banglore, Cochin, Jaipur, Chennai, Dehradun, lucknow

______

Age of firm (Years)

23 12

Diversification National ( 51 Cities) Local (Ahmedabad only)

Ownership Listed on Both Exchanges (BSE/NSE) Owned by three Private Partners


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Di i i /Discription/Company Parsvnath Developers Savvy Infrastructure

Vision Vision of a better worldOur vision statement can be encapsulated

From the beginning, the company strived for uncompromised quality,Our vision statement can be encapsulated

in our corporate philosophy and motto of `building a better world’. To envision, design and construct the most magnificent landmarks and edifices; to

t ib t t ibl i i l d

strived for uncompromised quality,unequaled architectural designs, and conscientious attention to details ofthe building process in every Project they built.�� E h j t bi th i i contribute tangibly in regional and

national development by way of key infrastructure projects, and to protect and preserve the environment we live in. At the end of the day, our vision is about

�� Each project combines the vision of Savvy Group of Companies withthat of their clients by articulating their dreams and bringing them toreality.y

making the world a better place to live in; to transform and uplift quality of living and lifestyles of each and every individual that comes in contact with us.

y�� Purchasers are informed and involved in every step of theconstruction process.�� Communication and commitment to detail before during commitment to detail before, during andafter the closing are part of the recognition earned by Savvy Groupof Companies.


Ahmedabad

Discription/Company Parsvnath Developers Savvy Infrastructure

Mission Committed to build a better world To provide “more” value for money to ourMission Committed to build a better world To cater to the real needs of a growing population To set standards and improve our environment Offer a wide portfolio of international quality products that cater to different markets and

To provide “more” value for money to our customers.�� To make safe, clean, efficient and technologically advanced buildings�� To take utmost care & design buildings

segments To deliver value for money and excellent investment returns Take customer relationships and customer satisfaction to new levels

from the inside out.�� To provide sound building utility systems, which form the backbone of ourbuildings.�� To provide an aesthetically superiorsatisfaction to new levels

To focus on strategic growth Evolve contemporary benchmarks in construction and marketing practices

�� To provide an aesthetically superior facade to the buildings.�� To provide high level of building maintenance after it is complete and sold.


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Discription/Discription/Company Parsvnath Developers Savvy Infrastructure

Type of Projects

IT Park., Townships, Residential, Commercial, Star Hotels, SEZs, Retail

Residential, Commercial, Sports Clubj

Handled

Target Market Mass (Upper lower to Upper Upper) Niche (Upper Upper/Corporate)

Number of Current Project

114 4

JV/MOUs SAN JOES No Major JVs other than Local Land JV/MOUs SAN JOES ICLEI (International Council for Local Environmental Initiative)GUDC (Gujarat Urban Development Company Limited)

No Major JVs other than Local Land Owners

Competitors Purvankara DevelopersOmaxe LtdSobha Devlopers

Safal GroupSharanam Devlopers

Brigade Devlopers


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Discription/Company Parsvnath Developers Savvy Infrastructure

Certifications ISO 9001ISO 14001OHSAS 18001

ISO 9001:2000CRISIL DA3+

Use of MIS Yes YesERP Implemented

Yes Yes

Corporate General Donations Schools at sitepSocial Responsibility

Labour welfare Canteen & Subsidised Food for LaboursMedical Facility to workers

Total Area Built 102 11 million sq ft 1 7 million sq ftTotal Area Built till date

102.11 million sq. ft 1.7 million sq ft

PAT(March 07)

271.7 Cr 6.16 Cr( )

Sensitivity to External Economic Environment

Moderate Low


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Ahmedabad

Mar '04 Mar '05 Mar '06 Mar '07 Mar '08Sales Turnover 112 15 303 21 643 83 1 236 14 1 726 25Sales Turnover 112.15 303.21 643.83 1,236.14 1,726.25Excise Duty 0 0 0 0.00 0.00Net Sales 112.15 303.21 643.83 1,236.14 1,726.25Other Income 0.8 3.64 9.93 24.85 65.99Stock Adjustments 0 0 0 0.00 0.00Total Income 112.95 306.85 653.76 1,260.99 1,792.24ExpenditureRaw Materials 0 0 0 0 00 0 00Raw Materials 0 0 0 0.00 0.00Power & Fuel Cost 0 0 0 8.90 11.31Employee Cost 2.49 4.28 7.56 28.73 54.13

Other Manufacturing Expenses 85.36 221.72 465.79 825.81 1,066.56

Selling and Admin Expenses 0 18.16 62.81 101.58 106.59

Miscellaneous Expenses 3.53 4.15 6.24 7.95 11.80

Preoperative Exp Capitalised 0 -17.3 -43.13 -93.34 -107.58Total Expenses 91.38 231.01 499.27 879.63 1,142.81By- Viral Soni, MTech Construction &


Operating Profit 20.77 72.2 144.56 356.51 583.44PBDIT 21.57 75.84 154.49 381.36 649.43Interest 0.36 1.05 2.69 19.30 39.11PBDT 21.21 74.79 151.8 362.06 610.32Depreciation 1.07 1.43 5.88 14.14 23.78Other Written Off 0 0.01 0.03 0 0Profit Before Tax 20.14 73.35 145.89 347.92 586.54Extra-ordinary items 0 0 -0.12 -5.85 0.28PBT (Post Extra-ord Items) 20.14 73.35 145.77 342.07 586.82Tax 1.73 7.44 39.55 70.28 178.08Reported Net Profit 18.41 65.89 106.25 271.78 408.74Total Value Addition 91.38 231.02 499.27 879.63 1,142.81Preference Dividend 0 0 0 0.00 0.00Equity Dividend 0.7 1.65 6.52 46.17 55.41Corporate Dividend Tax 0.09 0.23 0.91 7.85 9.42

Per share data (annualised)Shares in issue (lakhs) 0 82.43 989.14 1,846.96 1,846.96Earning Per Share (Rs) 0 79 94 10 74 14 71 22 13Earning Per Share (Rs) 0 79.94 10.74 14.71 22.13Equity Dividend (%) 0 20 20 25.00 30.00Book Value (Rs) 0 124.15 20.34 79.19 97.81By- Viral Soni, MTech Construction &


Mar '04 Mar '05 Mar '06 Mar '07 Mar '08

Sources of Fund (Rs in Cr)

12 mths 12 mths 12 mths 12 mths 12 mths

Total Share Capital 8 24 8 24 98 91 184 7 184 7Total Share Capital 8.24 8.24 98.91 184.7 184.7

Equity Share Capital 8.24 8.24 98.91 184.7 184.7

Share Application Money 0 0 0 0 0Share Application Money 0 0 0 0 0

Preference Share Capital 0 0 0 0 0Reserves 29.57 94.09 102.24 1277.98 1621.9

Revaluation Reserves 0 0 0 0 0Networth 37.81 102.33 201.15 1462.68 1806.6Secured Loans 48.47 120.7 235.85 1011.83 1604.42Unsecured Loans 0 0 0 0 97.85Total Debt 48.47 120.7 235.85 1011.83 1702.27Total Liabilities 86.28 223.03 437 2474.51 3508.87


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Application of Funds (Rs in Cr)

Mar '04 Mar '05 Mar '06 Mar '07 Mar '0812 mths 12 mths 12 mths 12 mths 12 mths

Gross Block 7.17 20.5 44.65 94.39 164.78

Less: Accum. Depreciation 3.14 3.32 9.02 23.1 45.31Net Block 4 03 17 18 35 63 71 29 119 47Net Block 4.03 17.18 35.63 71.29 119.47

Capital Work in Progress 0 0 17.27 38.73 101.51Investments 0.28 4.21 4.2 82.86 80.57Inventories 134.48 235.69 389.42 1341.91 1914.58Sundry Debtors 12.98 43.38 63.77 422.59 1130.24

Cash and Bank Balance 2.59 61.79 13.12 16.05 18.22

Total Current Assets 150.05 340.86 466.31 1780.55 3063.04

Loans and Advances 11.34 147.67 398.11 891.79 1116.47

Fixed Deposits 0 22 32 28 13 528 31 403 36Fixed Deposits 0 22.32 28.13 528.31 403.36Total CA, Loans & Advances 161.39 510.85 892.55 3200.65 4582.87Deffered Credit 0 0 0 0 0Current Liabilities 75.57 296.51 454.24 734.77 1013.47Provisions 3.88 12.71 58.4 184.24 362.08Provisions 3.88 12.71 58.4 184.24 362.08

Total CL & Provisions 79.45 309.22 512.64 919.01 1375.55Net Current Assets 81.94 201.63 379.91 2281.64 3207.32Miscellaneous Expenses 0.03 0.03 0 0 0Total Asset 86.28 223.05 437.01 2474.52 3508.87

Contingent Liabilities 0 25.05 47.44 119.26 276.87

Book Value (Rs) 0 124.15 20.34 79.19 97.81By- Viral Soni, MTech Construction & Project Manageent, CEPT University,

Ahmedabad


Ahmedabad

Identify the current strategies followed by Real Identify the current strategies followed by Real Estate developers.

Interpretation of financial statements of successful developer.Quantitative Ranking of factors considered by local players with regard to their overall business strategy.strategy.Hypothesis check by market survey conducted for target segment.


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Propose new strategy for “Savvy Infrastructure Propose new strategy for Savvy Infrastructure Ltd”

Broad level StrategygyOperation level Strategy

Action Required to Implement proposed strategy

b lFunction Vs Responsibility Matrix.


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Interpretation of financial statements of Interpretation of financial statements of Parsvnath Developers

Values in Cr Mar '04 Mar '05 Mar '06 Mar '07 Mar '08

Total Income 112.95 306.85 653.76 1260.99 1792.24

Total Expenses 91.38 231.01 499.27 879.63 1142.81

Expenses as % of total Income 80.9 75.28 76.37 69.76 63.76


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Ahmedabad

Mar '04 Mar '05 Mar '06 Mar '07 Mar '08Total Income 112.95 306.85 653.76 1260.99 1792.24E l C 2 49 4 28 7 56 28 73 54 13Employee Cost 2.49 4.28 7.56 28.73 54.13

Other Manufacturing Manufacturing Expenses 85.36 221.72 465.79 825.81 1066.56

Selling and gAdmin Expenses 0 18.16 62.81 101.58 106.59


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Ahmedabad


Sales Turnover 112.15 303.21 643.83 1236.14 1726.25

N P fi 18 41 65 89 106 25 271 78 408 74Net Profit 18.41 65.89 106.25 271.78 408.74


Ahmedabad


Equity Capital + Reserves 29.57 94.09 102.24 1277.98 1621.9

Total Debt 48.47 120.7 235.85 1011.83 1702.27ota Debt 8. 0. 35.85 0 .83 0 .

Total Liabilities 86.28 223.03 437 2474.51 3508.87

Net Profit (PAT)= 18.41 65.89 106.25 271.78 408.74


D/E Ratio 1.64 1.28 2.31 0.79 1.05/

Rate of Return 21.34 29.54 24.31 10.98 11.65By- Viral Soni, MTech Construction & Project Manageent, CEPT University,

Ahmedabad


Ahmedabad

Comparatively Low Financial Risk.Comparatively Low Financial Risk.Competitive Advantage – Utilization of Learning Curve in Operational Efficiency.g p yHigh short term liquidity.Distributed Market Risk – Having Diversified Distributed Market Risk Having Diversified Portfolio in product range and location wise.Organic growth of over all business year by g g y yyear.


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Considering overall business strategy, Considering overall business strategy, respondent firms were asked to give rating to following factors on scale of 5 to 1 based on its importance for their strategy.

Rating Scale

Extremely Imp 5

very Imp 4y p

Imp 3

less Imp 2

Not Imp 1By- Viral Soni, MTech Construction & Project Manageent, CEPT University,

Ahmedabad

ORGANIZATIONS

1 2 3 4 5 6 7 8 9 10

1. Aggressive Land Acquisition Strategy 4 5 3 4 5 4 2 2 4 5

Fa

Acquisition Strategy 4 5 3 4 5 4 2 2 4 5

2. External Sources of Finance 3 2 4 3 1 2 5 3 3 1

3 On site Project ctor

3. On site Project Management 2 3 4 3 3 5 1 3 5 3

4. Timely Completion 3 4 3 3 3 5 2 4 4 3rs

y p5. Unique Design 2 4 2 2 5 3 4 4 2 46. Quality of Work 4 3 3 2 3 3 4 2 3 2

7. Competitive Pricing 5 1 4 4 2 2 2 3 4 3By- Viral Soni, MTech Construction & Project Manageent, CEPT University,

Ahmedabad

Ratings

Factors 1 2 3 4 5 FxW=FxW/N RankFactors 1 2 3 4 5 FxW N Rank

1. Aggressive Land Acquisition Strategy 0 2 1 4 3 38 3.8 12 External Sources of 2. External Sources of Finance 2 2 4 1 1 27 2.7 63. On site Project Management 1 1 5 1 2 32 3.2 3

4. Timely Completion 0 1 5 3 1 34 3.4 2

5. Unique Design 0 4 1 4 1 32 3.2 3

6 Quality of Work 0 3 5 2 0 29 2 9 56. Quality of Work 0 3 5 2 0 29 2.9 5

7. Competitive Pricing 1 3 2 3 1 30 3 4By- Viral Soni, MTech Construction & Project Manageent, CEPT University,

Ahmedabad

Rank Factors

1 1. Land Acquisition Strategy

2 4. Timely Completion

3 3. On site Project Management

3 5. Unique Design

4 7. Competitive Pricing p g

5 6. Quality of Work

6 2. External Sources of Finance


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Survey Form FormatSurvey Form Format

Q.1 A property matching your basic area requirement is available p p y g y qat extremely lucrative location, (i.e. Road Facing, Posh locality and Well developed Infrastructure) would you pay 20 to 30% Premium price with compared to property rate at average llocation?A> Yes B> No

Q.2 A Project with Unique Design Concept (Such as Green Building, Integrated Township, Vernacular homes & weekend Homes) is located in relatively remote area with reasonably ) y ycomparable pricing, would you buy it?A> Yes B>NoBy- Viral Soni, MTech Construction &


Q.3 A Property is available at very attractive price range Q p y y p gbut carries very standard design and is situated at under developed location, what would be you buying decision?decision?A> Will Buy B> Wont Buy

Q.4 Your family’s cumulative annual income is A> 4,50,000 to 7,00,000 B> 7,00,000 to 10,00,000C> 10,00,000 to 15,00,000D> Above 15,00,000


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( I ) More than 70 % people from target segment will buy a property in project with very lucrative location and pay 20 to 30% premium price for the same.

( II ) More than 75% of target segment will invest in project with Unique Design concept.

( III ) More than 30% of the target segment will respond positively if prices are brought down on by standardizing designing and compromising location.p g

All three assumptions are then checked as hypothesis by Z test at 95% Confidence level and 5% error levelConfidence level and 5% error level.


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HypothesisQuestion Number Yes No

Ho thesis Zcal Value

ZtabValue Status

( I ) 1 26 9 >0.70 0.5801194 1.96 Accept

( II ) 2 24 11 >0.75 0.8192465 1.96 Accept

( III ) 3 6 29 >0.30 2.0182358 1.96 Reject

Note :- Zcal = |p-P| / {P (1-P) / n}^0.5Where p = value projected from survey in terms of %age

P = Value assumed in Hypothesis in terms of %agen = Size of Sample Survey


Ahmedabad


Ahmedabad

Strength• Unique Design Concepts• Well identified project location

Weakness• Products for only high end

market.(High Priced Projects)• Focussed target market• Very low financial risk• Advance technology orientation

• Low D/E ratio.• Lack of geographical diversification• No rare competitive advantage over

other players

Opportunity• Broad loyal customer base

Threats• Current strategy of unique designs can • Broad loyal customer base

• Potential to raise Debt• Can Leverage combination of its

Technical Know-how and Unique Design Concepts to gain rare

• Current strategy of unique designs can easily be imitated by competitors.

• High market risk is involved as most of the undertaken projects are premium priced projects and located in same cityDesign Concepts to gain rare

competitive advantage• Geographical Diversification can

explore potential investment opportunities

priced projects and located in same city.

opportunities.


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Rare CompititiveAdvantage

Proposed Strategy Structure

Broad Level Strategy

Operational Level Strategy

Functional Strategy 1



Responsible Entity 1

Responsible Entity 2


Ahmedabad

Competitive Advantage :-Competitive Advantage :

Project Concepts which are Uniquely Designed Project Concepts which are Uniquely Designed, Superiorly located & supported with technological know how and continuous ginnovations.


Ahmedabad

Develop Brand name in Unique Design and Develop Brand name in Unique Design and Premium Projects.Identify future development pattern and Invest y p pin Strategic locations.Increase Debt Leverage.gDiversify in neighbouring cities within Gujarat.Develop in-house design innovation centre.p gEmphasise on Superior quality and use of advance technology. gy


Ahmedabad

Design ConceptDesign ConceptUnique Designs.Use of Advanced Technology.gyAdded services to provide more value for money. Continue with niche market segment

Project Location Pro actively acquire strategic locations in developing

d t b d l d and to be developed area.Aggressive investment in Land pockets across the various locations.Diversify in the neighbouring cities in first five year phase.


Ahmedabad

Project Management, Quality and Time durationj g , Q yUse comprehensive planning, monitoring and controlling techniques.Provide superior quality at all level of projects as market Provide superior quality at all level of projects as market segment targeted is Upper-Upper, high quality standards are to be maintained.Strictly follow the time schedule for every stage of the projectStrictly follow the time schedule for every stage of the project.

FinanceEvaluate possibility of the raising finance from debt sources.Increase D/E ratio to support diversification.Undertake Financial feasibility before each project commencement and link financial reporting with overall planning of the project.


Ahmedabad

HR :-

Develop In house Design Innovation centre, implement employee reward scheme for promoting suggestions and innovation at every level.Integrated Recruitment and Training program.g g p g

Marketing & Sales

Develop strong brand loyalty.Promote concept in such a way that – minimum threshold of the quality is assumed by the ‘savvy’ name.

Legal

Comprehensive title clearance checks before entering into the project.Cautious and hassle free approach to be practiced.


Ahmedabad


Ahmedabad

SR. Function

Responsible entity

BOD CEO CFOGM‐

Marketin GM‐HRGM‐

OperatiGM ‐BD

Legal Consulta

Chief Architect

Sr Structural

Project

ManagIT

g onsBD

ntArchitect

designer

Managers

1 Strategy Formulation √ √ √

2 Increase Debt leverage √ √ √ √g

3Develop In House Innovation Centre √ √ √ √ √ √ √

4Unique Design Concepts Development

√ √ √ √ √

5Identify Future Development Pattern

√ √ √ √

6 Develop a Land Bank √ √ √ √ √

7Achievng Superior Q li S d d √ √ √ √ √ √7 Quality Standards √ √ √ √ √ √

8Diversification in other Cities √ √ √ √ √ √ √ √ √

9Project Management & Timely Completion

√ √ √ √ √ √ √ √y p

10Developing Strong Brand loyalty √ √ √ √ √ √ √ √

11Building Technical Knowledge Bank √ √ √ √ √ √ √Projecting Financial

f & √ √ √ √ √ √ √ √12

performance & Financial Reporting

√ √ √ √ √ √ √ √


Ahmedabad

Almost all the Organization in Construction Almost all the Organization in Construction industry who have defined strategy, it remains limited to Vision/Mission statement and rarely implemented with dedicated action plan.Strategies is to be designed and to be revised time to time based on changes in internal & external factors.S d i li i d f l l i f h Study is limited for local environment of the city and proposed strategy is specific to the studied organizationstudied organization.


Ahmedabad


Ahmedabad

Ganesh Developers

Manpasand

Labh

SN Developers

Savvy

Safal

Balaji Devlopers

Devark Developers

Parsvnath Devlopers

Vasani Devlopers


Ahmedabad

Strategic Management of Real Estate Firm

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