Strategy Modern Practices of

Development and Implementation

Individual Project

Fine Home International Group

Real Estate Company

EMBA Strategy and Leadership Program

Instructor: Dr. Jaafar Badwan

Student: Mohammed Nasser

Project One – Please choose any of the following industries and write about the external

environment that will impact their performance:

Topic to cover:

1- Industry development / review

2- External factor impacting the industry and challenges

Fine Home International Group

Firstly, I will talk about Real Estate industry in UAE especially in Emirate of Abu Dhabi.

Overview about industry development during last few years in UAE.

Abu Dhabi it’s Capital of the United Arab Emirates. I believe this is a city to watch out

for globally – it is well on its way to becoming a regional hub by 2015 and a World

Winning City by 2030, sitting alongside the likes of Shanghai and Mumbai in terms of

global reach and influence.

Abu Dhabi has ambitious plans to become a truly sustainable world class city, based on

infrastructure investment, large scale real estate development, world class cultural

facilities and major events and underpinned by significant population and employment

growth. As part of this plan, the Abu Dhabi government has published a number of

strategies to set direction of growth to 2030 covering urban planning, economic

development and transportation initiatives.

Over the past five years, Abu Dhabi has achieved strong economic development, with a

growth rate averaging over 9% per year. Urban growth challenges, resulting from

demographic, population shifts, etc...

The current global and regional economic conditions ask for Governments, Privet and

Regulatory Authorities to take a more active role in creating a framework that can rectify

and solve real estate issues.

In rapidly changing global and local economic conditions, Fine Home International

Group is committed to responding to the current urban growth challenges by developing

a more transparent framework.

This commitment is at the origin of the Abu Dhabi real estate forecast with primary aim

to follow the needs, challenges and opportunities of the real estate sector in Abu Dhabi.

With the Forecast, Fine Home International Group contributes to the strengthening and

more transparent regulatory environment by adding a new method to help all sides

throughout buying and selling properties as well as give them high security and high

satisfaction.

In every industry or market, there are several factors that an organization has to consider.

The market’s business environment such as its political, economic, social, technological,

legal and environmental conditions has to be analyzed in order to objectively identify the

organization fitness in the industry. The market analysis also helps organizations design a

well-developed strategy as it will be based upon concrete conditions of the country or

identified market.:

Demographic:

Demographic factors are exerted primarily through the characteristics and customs of

people. Examples of these factors are general population trends; attitudes toward

household formation (e.g. living alone or with others, having children, etc.); household

characteristics (e.g., family size and age groupings, etc.); changes in lifestyles and living

conditions, neighborhood characteristics, and attitudes of people toward government,

property development, ecological issues, and education level.

Physical:

Physical or environmental factors are the most noticeable because they can be observed.

On a macro level, these factors have played a large part in the location of cities. On a

micro level, their influence is felt down to the individual parcel. Physical and

environmental forces are either natural or man-made.

Important natural factors that affect real property value are topography; soil; climate;

natural resources such as water; scenic beauty or view; and flood or earthquake zones.

Important physical factors are the size and shape of a parcel, infrastructure, and the

accessibility of the parcel to other desirable destinations such schools, commercial areas,

residential area, industrial area, etc...

Economic:

Economic factors strongly affect city growth or decline and therefore property values.

This is generally measured by economic indicators such as the GDP, employment data,

manufacturing activity, the prices of goods, etc.

Broadly speaking, when the economy is sluggish, so is real estate. Examples of demand

factors are trends in employment and income, the availability of financing, the level of

interest rates, and trends in a community's economic base (e.g. industrial expansion or

contraction). Examples of economic factors that affect supply are the availability of

vacant and improved properties, rental and price patterns of existing properties,

construction planned or in progress, and construction costs.

Interest Rates:

Interest rates also have a major impact on the real estate markets.

Changes in interest rates can greatly influence a person's ability to purchase a residential

or commercial property. That is because in one hand the interest rates down, the cost to

obtain a mortgage to buy a home decreases, which creates a higher demand for real

estate, which pushes prices up.

In the other hand, as interest rates rise up, the cost to obtain a mortgage increases, thus

lowering demand and prices of real estate, this factor really major especially in UAE

market 90% of people are depend on the mortgage when they buy a property.

Governmental:

These broadly include political decisions made by all levels of government.

The demand and supply of real estate, and hence its value, are strongly influenced by

governmental actions and controls. Governmental influences include zoning and building

codes, development regulations, environmental regulation, police, fire, and health

protection, the construction of physical infrastructure (e.g., utilities and transportation

networks) and public school systems, Specific legislation, such as rent control, may

influence real estate markets. Federal monetary policy and federal and emirate fiscal

policies also influence real estate markets.

Expo 2020:

UAE has emerged as a front runner in the bid to host the coveted Expo 2020, and analysts

expect a successful bid (results are awaited in November 2013) to result in a massive shot

in the arm for the overall economy, as well as property prices in the emirate and across

the UAE.

In the event it does, close to 300,000 more jobs could be created with 25 million people

visiting UAE. 90 % of the job opportunities would occur from 2018 to 2021, with most of

the jobs created in the travel and tourism sector. This indicates a good chance that a high

percentage of these will be converted into permanent jobs, which would benefit the

expanded economy in the post-Expo period.

In conclusion, the report maintains that the current rally is based on solid fundamentals,

which suggests that it will continue for the foreseeable period. The recovery of UAE real

estate market started in 2011. It has set the scene for a slow, strong and persistent rise in

housing prices, pulled by real demand for housing from end users and a steady supply of

new developments to match it.

This commitment towards improving and strengthening corporate governance practices

by protecting property rights has helped gain new investors and maintain existing ones.

Stakeholders such as home-owners and tenants have regained confidence in the real

estate sector, as reflected in the recovery of market prices,” it says.

Project Two- Strategic Factors impacting the Firm. (Please select a firm)

Topic ton cover

1- Strategic factor that impact the firm internally and externally. Please apply Porter's 5

forces.

2- Please apply either SWOT or SFAS in your discussions of the threat/opportunities and

Strength/weakness.

I will present the internal and external strategic factors these will impacting our company

by apply a classic business tool and probably the most widely used framework for

strategic industry analysis are commonly known as Porter’s Five Forces. The framework

is based on Michael Porter’s seminal work published in 1976 and recently updated in

January 2008 (Porter, 2008). An industry member or security analyst, utilizing this

framework, can model an industry with five controlling economic processes:

1- The Threat of New Entrants:

New entrants to any industry typically bring to it new capacity, a desire to gain market

share, and substantial resources. Therefore they are threats to an established corporation.

In UAE every day we have new entrants get into the real estate market because it is a

high competition market without any barriers to get in, no strict policies or regulations

are implemented to restricting new entrants, so they can pose threat to old company such

as Fine Home International Group, but recently the government of UAE planning to put

high regulations to inter the real estate market, and make new entrants pay 5 million AED

for the bank as deposit (capital requirement) to get in the real estate market, but this

policy doesn’t apply till now, and we are under threat till apply it in UAE.

2- Bargaining power of the Buyers:

In real estate market the bargaining of the buyers are little pit strong because we are in

perfect competition market as well as the customers are very sensitive to price, when

price will be down the customer will buy more and the opposite is true, in addition the

customers can easily find substitutes product e.g. ( living in villa -- living in tower –

living in building) the products differentiation is low, furthermore, product switching is

not too costly the customers can transfer to any suppliers easily e.g. (Tomouh -- Sorouh --

AL Dar -- Aabbar- etc…), or transfer the community also, moreover, buyers are free to

buy from any real estate company in UAE that will increase the competition in the

market because customers aren’t loyal to one company aside some cases the customer

deal with one company.

3- Bargaining Power of the Suppliers:

Suppliers can affect an industry through their ability to raise prices or reduce the quality

of purchased goods and services. A supplier or supplier group is powerful if some of the

following factors apply:

The Supplier group is dominated by few companies and is more concentrated than the

industry especially in UAE 90% percent of all properties are produced by huge company

like ( Al Dar - Sorouh - Tomouh - Abbar) and Big Banks Like ( FGB - NBAD ) , in

addition, the supplier products is an important input to the buyers that mean to us also

because we are Real estate agent and consider as a buyer for Banks or Construction

Company and we take the offers and data from them, this data are very important for us,

Furthermore, the supplier group posses credible threat of forward integration like FGB

Bank he make forward integration and establish real estate company known as First Gulf

Real Estate.

4- The Threat of substitute products and services

A substitute product is a product that appears to be different but can satisfy the same need

as another product. So the threat if substitute products and services will going to be high,

because in real estate market the substitute products can easily found e.g open the internet

( Dubizzle - Propertyfinder - etc....), in addition the consumer can transfer from company

to another one in easily way with very low switching cost, moreover, the price for

properties in Abu Dhabi are almost the same for example ( Al Reem Island ) all 3 BR

apartment in all towers are rent between 135 k and 145 k per year this thing will create

more threat according to substitute products, as well as the consumer are willing to

switch products and change between apartment E.g. Transfer from Sun & Sky Towers in

AL Reem Island to Gate Tower in Al Reem Island also only to change the apartment and

view and life style without any other benefits.

5- The intensity of the rivalry among competitors in the industry:

Real Estate Market is a fast growth market in UAE, all competitors in market are offer

similar or almost similar properties in same price also this will create high competition in

market, in addition, all real estate company follow the same strategy, furthermore, in

UAE especially in Abu Dhabi and Dubai there are many competing companies.

The Threat of New Entrants:1. Entry barriers are low.2. Government regulations are not strict to new entrants.

Bargaining power of the Buyers:1. Customers are sensitive to prices.2. Substitute products can be easily found.3. Product switching is not too costly.4. Buyers can buy from any supplier.

Bargaining Power of the Suppliers:The Supplier group is dominated by few companies and is more concentrated than the industryThe supplier products is an important input to the buyers’ businessThe supplier group posses credible threat of forward integration

The Threat of substitute products and services:1. Substitute products can be easily found.2. Product switching can be easily done.3. Prices of products are almost the same.4. Consumers are willing to switch products.

The intensity of the rivalry among competitors in the industry1. Competitors offer similar or almost similar products.2. Little differences in marketing strategies.3. There are many competing companies.

Porter's 5 Forces

SWOT Analysis:

An analysis for Fine home International Group internal and external factors is necessary

in order to determine the company’s strengths and weaknesses as well as the

opportunities and threats in the market. Using the SWOT matrix, FHIG character and its

external variables can be studied. The photo shows the relevant points in FHIG

The company’s strengths, particularly its good reputation as well as excellent dealing and

high quality with consumers to give them high satisfaction presented by high qualified

staff as well as we have a lot of new technology in advertisements and presentation while

the company weaknesses is undifferentiated properties according to properties in the

UAE market.

The opportunities presented by the UAE real estate market are also advantageous to the

company. With the massive construction projects that are ongoing and future projects are

still under construction that will finish in 2030 as Abu Dhabi vision and high opportunity

to expansion to international market, although there are threats in the real estate industry

as I mentioned before the threat of new entrants and threat of substitute properties as well

as threat of forward integration by Big the leader company in the market.

Strengths• Good image and reputation in market• Excellent dealing with high quality • Highly qualified staff• have new methods to advertisements and take photo for properties

Weaknesses• Undifferentiated products

Opportunities • UAE real estate industry is booming• Many government development and private construction will finish in 2030• Expansion to international markets

Threats• Threats of new entrants• Threat of substitute properties• Forward integration from big company

Project Three- Review and selection of strategies for a specific firm you selected.

1- Review of strategies that will enable the firm to maintain sustainable growth and

competitive advantage

2- Select the strategy that you think is suitable and please support your selection

with an argument.

In my company (Fine Home International Group) we are planning to be No. 1 Real Estate

Company in UAE

Our Mission:

We are working hard to give our consumers high satisfaction when they need a properties

as well as we working to expanding our company to increase our market share throughout

our professional staff and implementing a new technology in real estate market as well as

increase our properties advertisement in all Emirates especially in Abu Dhabi to Promote

its image as a global destination, a good place to live, work, visit and enjoy life

Our Vision:

Achieve our mission in all emirates and to be recognize as the most credible and reliable

real estate company in the region, in addition, we will work to fill the gap and establish

trust and transparency between all sides in properties transaction processes.

Our Goals:

- To become one of the leading real estate company in UAE by take high position between other companies in the market

- Expand to all emirates and globally to increase our market share.

- Build trust and high satisfaction for our consumer in the region and globally to increase

our reputation and image in the market.

- Implement new technology in real estate market, which will change real estate

perspective to hug segments of consumers.

Frankly, we must use suitable strategy which will really help us to maintain a sustainable

growth and competitive advantage as well as achieve our goals.

All research In UAE Real Estate Market talking about the market will going to have a

real growth in next 5 years, so this is an opportunities for us to implement good strategy

in term to increase our profit and our market share, and I will present simple research for

growth rate in real estate market in Abu Dhabi during last 6 months

Abu Dhabi Real Estate Market Overview - Q2 2014

The second quarter of 2014 continued to witness growth in Abu Dhabi's prime residential

market with little change in the office, retail and hospitality sectors. The Abu Dhabi

market continues to be dominated by government related investment with short-term

demand being fuelled by investment and job growth from new major government backed

construction projects, such as the Airport expansion, Etihad Rail, Saadiyat Island

museums and other major infrastructure, economic and social development initiatives. A

sustainable recovery requires the government to continue to implement supply controls as

many developers are now reviewing schemes that had been placed on hold following the

market downturn.

Abu Dhabi Real Estate Market Overview - Q3 2014

The third quarter of 2014 recorded the continued growth of prices in the residential

market, with more limited improvement in the hospitality, retail and office sectors. All

sectors of the Abu Dhabi market are now positioned in the recovery stage of their cycle,

for the first time since 2008. Residential remains the strongest performing sector driven

by positive investor sentiment and population growth and potential under-supply. The

office market has witnessed growth for the first time after being stable for the past 2

years. Vacancy rates are reducing due to increased market absorption and a reduction in

speculative supply in the pipeline. Retail rents for malls on Abu Dhabi Island have

remained stable this quarter, with some malls outside the Abu Dhabi Island seeing a

marginal increase in rents as they have witnessed higher footfalls. The Abu Dhabi hotel

sector continues to recover, with the year to August seeing higher occupancies (71%)

compared to 2013 (64%). Abu Dhabi hotels experienced higher occupancies than Dubai

in July (55% compared to 50%), for the first time ever.

according to previous market research we see the market going to growth in the next

year, and we have tow strategy to implement it as following:

Strategy Growth, Horizontal Growth

We can achieve horizontal growth by expanding our operations into other geographic

locations and concentrate more for another emirates not only in Abu Dhabi as well as

expanding globally like Qatar or Bahrain..... For this expending we need high fainaicial

resource to take this step, as well as we can achieve horizontal growth by increasing the

range of properties offered to real estate market throughout increase the quantity of daily

offers more and more to face the customer demands and cover the gap between supply

and demand in real estate market, and as an expectation for the real estate market will

going to potential growth, if we implement growth strategies we will increase our profit

and market share in next 3 years..

Stability Strategy

We can choose stability over growth by continuing our current activities without any

significant change in direction.

But, this strategy very popular with small business owners who have found a niche and

they happy with their success and the manageable size of their firms. Stability strategies

can be very useful in the short run, but it can be dangerous if followed for too long. Some

of the more popular of these strategies are the pause/proceed-with-caution, no-change,

and profit strategies.

As we know and all other real estate companies know that the real estate market are very

growth market in the last 3 years, and if we stability strategy firstly we will not achieve

our goals as well as our rank in real estate market will decrease and our market share will

decrease also, because we are in perfect competition market and each day new entrants

will coming to the market and they bring to it new capacity, a desire to gain market

share, and substantial resources.

In conclusion we can achieve our goals only with implementing a Growth strategy,

Horizontal Growth and increase our activities to compete another companies and stay in

the market as well as to increase our market share and our position, or expanding our

company to another emirates, in fact we are working now in FHIG to increase our market

share and we already expand and we will open our new branch in Dubai in the first of

second quarter of 2015

References:

Jllmena.com

Hraverd university, research department

Abu Dhabi Urban Planning Council

Dubai Chamber, Dubai Real Estate Sector

Strategic Management and Business Policy book