Case Study Description of Real-Estate Investment Trusts
This technical note provides a thorough overview of real-estate investment trusts (REITs). Created to promote and facilitate widespread public ownership of commercial real estate, REITs are companies that own real-estate properties or mortgages and that operate within certain guidelines, allowing them to qualify for REIT status. Focusing primarily on equity REITs, the note covers a broad range of issues, including valuation and its many drivers, and also examines the advantages of REIT ownership versus property ownership. The note concludes with a discussion of the future of REITs.
Authors :: C. Ray Smith, Randall Smith, Henley Green
Swot Analysis of "Real-Estate Investment Trusts" written by C. Ray Smith, Randall Smith, Henley Green includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Reits Estate facing as an external strategic factors. Some of the topics covered in Real-Estate Investment Trusts case study are - Strategic Management Strategies, Financial management and Communication.
Some of the macro environment factors that can be used to understand the Real-Estate Investment Trusts casestudy better are - – increasing commodity prices, talent flight as more people leaving formal jobs, geopolitical disruptions, increasing household debt because of falling income levels, central banks are concerned over increasing inflation, customer relationship management is fast transforming because of increasing concerns over data privacy, there is backlash against globalization,
banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of Real-Estate Investment Trusts
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Real-Estate Investment Trusts case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Reits Estate, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Reits Estate operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Real-Estate Investment Trusts can be done for the following purposes –
1. Strategic planning using facts provided in Real-Estate Investment Trusts case study
2. Improving business portfolio management of Reits Estate
3. Assessing feasibility of the new initiative in Communication field.
4. Making a Communication topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Reits Estate
Strengths Real-Estate Investment Trusts | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Reits Estate in Real-Estate Investment Trusts Harvard Business Review case study are -
Analytics focus
– Reits Estate is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by C. Ray Smith, Randall Smith, Henley Green can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Learning organization
- Reits Estate is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Reits Estate is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Real-Estate Investment Trusts Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Training and development
– Reits Estate has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Real-Estate Investment Trusts Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Superior customer experience
– The customer experience strategy of Reits Estate in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High switching costs
– The high switching costs that Reits Estate has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Effective Research and Development (R&D)
– Reits Estate has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Real-Estate Investment Trusts - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Low bargaining power of suppliers
– Suppliers of Reits Estate in the sector have low bargaining power. Real-Estate Investment Trusts has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Reits Estate to manage not only supply disruptions but also source products at highly competitive prices.
Strong track record of project management
– Reits Estate is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
High brand equity
– Reits Estate has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Reits Estate to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Sustainable margins compare to other players in Communication industry
– Real-Estate Investment Trusts firm has clearly differentiated products in the market place. This has enabled Reits Estate to fetch slight price premium compare to the competitors in the Communication industry. The sustainable margins have also helped Reits Estate to invest into research and development (R&D) and innovation.
Organizational Resilience of Reits Estate
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Reits Estate does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to recruit top talent
– Reits Estate is one of the leading recruiters in the industry. Managers in the Real-Estate Investment Trusts are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Weaknesses Real-Estate Investment Trusts | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Real-Estate Investment Trusts are -
Increasing silos among functional specialists
– The organizational structure of Reits Estate is dominated by functional specialists. It is not different from other players in the Communication segment. Reits Estate needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Reits Estate to focus more on services rather than just following the product oriented approach.
Low market penetration in new markets
– Outside its home market of Reits Estate, firm in the HBR case study Real-Estate Investment Trusts needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Capital Spending Reduction
– Even during the low interest decade, Reits Estate has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Slow decision making process
– As mentioned earlier in the report, Reits Estate has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Reits Estate even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Skills based hiring
– The stress on hiring functional specialists at Reits Estate has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
No frontier risks strategy
– After analyzing the HBR case study Real-Estate Investment Trusts, it seems that company is thinking about the frontier risks that can impact Communication strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Aligning sales with marketing
– It come across in the case study Real-Estate Investment Trusts that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Real-Estate Investment Trusts can leverage the sales team experience to cultivate customer relationships as Reits Estate is planning to shift buying processes online.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Real-Estate Investment Trusts, in the dynamic environment Reits Estate has struggled to respond to the nimble upstart competition. Reits Estate has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Real-Estate Investment Trusts HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Reits Estate has relatively successful track record of launching new products.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Reits Estate supply chain. Even after few cautionary changes mentioned in the HBR case study - Real-Estate Investment Trusts, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Reits Estate vulnerable to further global disruptions in South East Asia.
High bargaining power of channel partners
– Because of the regulatory requirements, C. Ray Smith, Randall Smith, Henley Green suggests that, Reits Estate is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Opportunities Real-Estate Investment Trusts | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Real-Estate Investment Trusts are -
Building a culture of innovation
– managers at Reits Estate can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Communication segment.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Reits Estate in the consumer business. Now Reits Estate can target international markets with far fewer capital restrictions requirements than the existing system.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Communication industry, but it has also influenced the consumer preferences. Reits Estate can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Reits Estate in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Communication segment, and it will provide faster access to the consumers.
Manufacturing automation
– Reits Estate can use the latest technology developments to improve its manufacturing and designing process in Communication segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Low interest rates
– Even though inflation is raising its head in most developed economies, Reits Estate can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Buying journey improvements
– Reits Estate can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Real-Estate Investment Trusts suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Reits Estate can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Creating value in data economy
– The success of analytics program of Reits Estate has opened avenues for new revenue streams for the organization in the industry. This can help Reits Estate to build a more holistic ecosystem as suggested in the Real-Estate Investment Trusts case study. Reits Estate can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Reits Estate can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Reits Estate can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Real-Estate Investment Trusts, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Communication industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Reits Estate can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Reits Estate can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Learning at scale
– Online learning technologies has now opened space for Reits Estate to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Threats Real-Estate Investment Trusts External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Real-Estate Investment Trusts are -
Shortening product life cycle
– it is one of the major threat that Reits Estate is facing in Communication sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Reits Estate needs to understand the core reasons impacting the Communication industry. This will help it in building a better workplace.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Reits Estate.
Environmental challenges
– Reits Estate needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Reits Estate can take advantage of this fund but it will also bring new competitors in the Communication industry.
Technology acceleration in Forth Industrial Revolution
– Reits Estate has witnessed rapid integration of technology during Covid-19 in the Communication industry. As one of the leading players in the industry, Reits Estate needs to keep up with the evolution of technology in the Communication sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Reits Estate business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Reits Estate
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Reits Estate.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Reits Estate with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Real-Estate Investment Trusts, Reits Estate may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Communication .
Stagnating economy with rate increase
– Reits Estate can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Reits Estate in the Communication industry. The Communication industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
High dependence on third party suppliers
– Reits Estate high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Reits Estate in the Communication sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Real-Estate Investment Trusts Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Real-Estate Investment Trusts needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Real-Estate Investment Trusts is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Real-Estate Investment Trusts is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Real-Estate Investment Trusts is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Reits Estate needs to make to build a sustainable competitive advantage.