Steps To Start A Real Estate Company And Analyzing The Business Environment Essay.

Question:

Discuss about the Plan & Plot Interior and Construction Pvt. Ltd.

The report is at the view of selecting the real estate company hypothetically and the steps involved in its opening will be elucidated. The company selected is Plan & Plot Interior and Construction Pvt. Ltd. (P & P). Basically the company deals in the house construction and along with it providing the interior decoration at the relatively low cost to initially establish the business. Thereafter the internal and external analysis of business environment has been done to gain the market knowledge and the level of competition that prevails.

First of all the assumed business has been selected and the steps involved in the accomplishment of business process are examined with the help of its 7 steps. Secondly the external environment has been studied through the Porter’s 5 forces model to evaluate the market condition and thereafter the internal environment was also researched using the SWOT tool where the strengths and lacks of the internal business are gained so that required changes could be incorporated. Lastly, the strengths and weakness of the internal and external tool has been investigated to mark its authentication and predicting the future strategies.

 The company that has been selected for start-up is the Plot and Plan Interior and Construction Pvt. Ltd. The company deals in constructing the plans for building the houses, apartments and deals with the housing agencies. It mainly deals with the housing constructions along with the interior designing of the homes. Overall, the business deals with constructing and decorating the houses. It also undertakes the activities of repairing and renovating the plan of house by efficiently utilising the spaces and turning it out into the modern houses. Exporting of services is also supported through the online provision of services by constructing the group of freelancers who renders there services to foreign clients as well. This created the job opportunity as well as spread the business in overseas market without much investment of capital. To set up the business and implement the ideas the set up need to be designed and there is a set procedure which is to be followed to start-up the business successfully and with the entire authentication (Mintzer, 2009). These steps are elucidated as under:

• Market research: First of all to start a business the market research has to be done. For that the core market should be analysed and use of the products and services need to be evaluated. It is necessary to know whether the services provided are in demand in the market or are they one of its own kind and likely to enhance the demand in the near future. The market survey is essential with respect to know whether the services are already existent in the market or is it covering the niche market. Market research also includes the study in terms of average income that the competitors are able to generate. While researching upon the market the competitors must also be figured out and there moves must be monitored and accordingly the launch is to be made (Houzz, 2013).
• Financial requirements: Finance is the blood of any business, as the body stops functioning without the blood similar is the case with the business. It could not survive for long period of time without the adequate fund. To start the business huge amount of capital requirement is necessary and plans are made to arrange the finance and what sources of funding need to be used. The financial aspect also depends upon the size of the business, if the business is at the major scale the requirements of finance is according to it. If investors are invited then marketing plan has to be designed in order to attract the investors to invest their values in the business (Bienert & Santovito, 2017).
• Hiring the legal advisor: The legal advisor is another crucial element that plays a vital role in opening up of the business. The correct legal advisor helps in constructing the best and reliable paperwork which supports the business in an efficient manner. Also the good legal advisor always tries to protect and favour the company with their knowledge and practices. Attorneys helps in drafting the authentic contract, review the lease criteria, selects the best structure for business and construct the better business plan. The adequate manner to appoint the attorney is either through the referrals or by adopting the networking criteria (Kelly, 2016).
• Hiring the accountant: The selection of best accountant is essential enough to design and advice about the best ownership option to opt for. The accountant assists the attorney in rendering the advices to owner. The financial books are recorded by the accountants like bookkeeping and auditing the financial affairs that the company undergo. It is the duty of the accountant to advice owner in terms of the reserve policy as how to maintain the reserve and what will be the best essential manner to utilise the reserve in an effective manner. Accountant also assists the organisation in dealing with the tax affairs of the company and how these taxes could be paid so that entire payment has been made and tax saving is also enjoyed without any evasion (Tsui, Zhang & Chen, 2017).
• Deciding the structure of business: By the structure of business it is meant that which type of ownership will be selected. Is the business setup a sole-proprietorship? Is the business favouring partnership? Initiating a corporation is also a thoughtful option but requires a lot more investment in its establishment. Even the limited liability corporation (LLP) could be adopted. Every business has its own choices and liabilities along with the liabilities there taxes and other paper work involved in choosing any type of business as accordingly the legal authorities and dealing takes place. The attorney and accountant assists in making the decision and drawing out the valuable and suitable solution beneficial for the business and its further development in the market area.
• Deciding the name of business: For every business its name is the foremost thing that strikes the mind of the partners, competitors, investors and other stakeholders. The company’s name is the initial identity of the business. At the time of registration the name of the company is enrolled. It is the principle of conducting the business that a business is the artificial person and it comprises of its separate legal entity. Also the attention should be paid on selecting the best business name. There are certain properties that need to be kept in mind while deciding the business name, the name selected should not be similar to the other business as the popularity gets connected when the similar names are adopted and it is adverse for either of the parties. The spell check need to be made, the meaning of the name should comprise of certain meaning or it should be such that the characteristics and nature of the business gets depicted through the name itself (Yderfält & Roxenhall, 2017).
• Getting all the necessary licenses and permits: The business indulged in the real estate need to acquire the valid licence and government permit to deal in the properties and local law of the city or state where the property has been located. The agents dealing in the real estate have to acquire the required license to precede the business further in an authentic manner. For that all the category of licenses need to be researched upon and the suitable category of license has to be adopted for the flexible and barrier free working is conducted in the future and development could be ensured (Winfree, Roasentraub & Mills, 2016).

Porter’s 5 forces model is given by Michael Porter who was the professor at Harvard Business School. The aim of developing this theory is to analyse the external market also known as the macro environment for the sake of evaluating the market competition that prevails in the market. Considering the real estate industry the porter’s analysis will assist in knowing the scenario of market in terms of real estate so that internal functioning could be made (Xiao & Xu, 2017).

1. Threat to new entrants: Real estate industry is the unique industry and is considered different from the construction industry. Many entrepreneurs are trying their skills, knowledge and abilities in the field of real estate to attain the heights by covering the major market area and attracting consumers. Also the real estate industry highly contributes in the economy of the country. In the recent times real estate business is growing up with the high pace and thereby the competition has been increased in different regions resulting in the political and economic growth simultaneously (Zhang & Ren, 2006).
2. The threat if substitute products: As the real estate industry is in the growing times the market targeted is changing on the continuous basis. The competition has become strict as the industry has transferred from public consumption to the private consumption. The personal consumption ask for varieties and since the competition is tough and everyone is entering in the similar field as the property business is gaining hike therefore people are switching to the best dealer and broker. Therefore in order to stay ahead of the substitutes two attributes have been added to business to grab the customers’ attention and enjoy two services at a time (Selvaraj & Krishna, 2017).
3. The bargaining power of suppliers: The suppliers play a vital role in conducting the business as the business is moreover dependent over the suppliers and they might use the threat of pricing by increasing the rates of the products which bound the buyers to pay the extra amount and recover it from their buyers or in order to maintain the market position and stand in the competition firmly the company might deduct the profit margin. The costing of land is the premier part in the case of real estate business, since the supply of the lands are limited in number therefore the bargaining power increases as the provider of land has the high-supply side (Chiu, 2016).
4. The bargaining power of buyers: Buyer could be anybody; it can be an individual, family, any organisation or the department of government. In order to analyse the bargaining power of the purchasing behaviour of consumers are analysed. The private consumption buyer are more conscious now, they are aware enough about the things happening within the market and could easily compare the prices of and bargain accordingly. The developer of land renders the large fluctuations rights which directly affect the relationship and performance of the sales person and the income also gets affected. When the buyer get to know about the price flexibility within the process of land acquisition the bargaining power increases. Also the new entrants provide fewer prices and prefer price flexibility to construct the strong consumer base (Hayness, Nunnington & Eccles, 2017).
5. The competition between industry and rivals: The competitors are those dealing in the similar area of work and setting almost the similar pricing strategies to gain consumer base and retail the consumer so as to increase the consumer loyalty. Competitors are considered to be the most important part of the business as the consumers today need the number of options so that consumers could decide accordingly and with the increased competitor rivalry also increases (Ang et al, 2017).

Steps to Start a Real Estate Company

SWOT is the acronym of Strength, Weakness, Opportunity and Strength. It is the internal analysis also known as micro analysis. It helps in analysing the internal atmosphere of the company (Xiao, 2016).

• Strength: Strengths of the real estate business Plan and Plot Pvt. Ltd. (P & P) is that it helps in driving out the individual abilities and the resources are available in high quality. The individual competencies are well defined in the real estate business. The real estate team is effective as well as proactive (Li et al, ).
• Weakness: In the real estate and interior development business there is the resistance and adaptability of changes i.e. fluctuation in rate takes place. There occurs the gap in the organisational leadership and motivational problems also exist within the staff. The process of dealing with the things consists of stress and difficulty occurs (Jiang et al, 2017).
• Opportunities: The opportunities attached with policies and procedures initially implement the technology in the very new manner which should be effective. The competition could be weakened so that fair business is carried also the international real estate strategy could be adopted to flourish the business and lead it to new heights (Andres, 2016).
• Threats: The level of risk attached with real estate is very high and the frequent changes occur in the environment of positioning. The biggest threat is the changes affecting the preferences of the buyer and the modification taking place on the legal ground (Lerena, 2016).

The strength of external sources porter’s five models is that it helps in analysing the external environment which helps in gaining the knowledge and awareness of the changing trends and tastes of the consumer. To what extent consumers are able to bargain and how much price flexibility does the real estate developer provides (Zhao et al, 2016 ).

In terms of SWOT analysis it is an internal environment analysis which supports the internal structure of real estate business. It evaluates the working of business and what strength and weakness does it comprises of. Also the opportunities and threats are been seen and how these opportunities could be converted into strengths and the threats to be taken as challenges (Van & Besthorn, 2017).

The weakness of porter’s five models is that the external environment is dynamic in nature and there are certain factors that could not be predicted and they could be the political and legal norm that affects the business and at the certain stages due to these reason even the business come to an end. In the case of real estate the land acquisition by government is done and on the orders of government the land need to be vacated (Schaltegger, Burritt and Petersen, 2017).

Weakness in the SWOT analysis is the weakness and threat portion. The weakness of the business lowers down the goodwill of the business and they are the portion where the company lacks. It leads to the improvement of the internal structure only and does not pay any role in rejuvenating the external environment. 

Conclusion

The report argues over the construction business. For the sake of assessment the hypothetical company has been selected, namely, Plan and Plot Interior and Construction Pvt. Ltd (P & P). The steps of opening up the business has been discussed in the seven steps which include the generation of ideas till the implementation of idea and starting up the business and heading towards the development. The business is further been analysed in the internal and external market using the competitive strategies and tools. For understanding and evaluating the external environment porter’s 5 forces model has been selected and in order to analyse the construction and interior designing business SWOT analysis has been done. At the end both the tools were evaluated on the parameter of strength and weakness.

Analyzing Business Environment

References 

Andres, P., 2016. Strategic planning and analysis of a small construction company.

Ang, S., Olanrewaju, A.L., Chia, F.C. and Tan, Y.S., 2017, Awareness on Sustainable Affordable Housing Among Homebuyers in Malaysia, In MATEC Web of Conferences, Vol. 103, p. 03014.

Bienert, S. and Santovito, R., 2017. Drivers and opportunities of sustainability in real estate development. Routledge Companion to Real Estate Development.

Chiu, D.S.T., 2016. A technology-driven solution to disrupt the residential real estate industry of existing homes (Doctoral dissertation, Massachusetts Institute of Technology).

Haynes, B., Nunnington, N. and Eccles, T., 2017. Corporate real estate asset management: Strategy and Implementation. Taylor & Francis.

Houzz, 2013, 6 steps to planning a successful building project, https://www.forbes.com/sites/houzz/2013/11/27/6-steps-to-planning-a-successful-building-project/#b2eca473b45e, accessed on 15^th October 2017.

Jiang, R., Mao, C., Hou, L., Wu, C. and Tan, J., 2017, A SWOT analysis for promoting off-site construction under the backdrop of China’s new urbanisation, Journal of Cleaner Production.

Kelly, M., 2016. Business Idea Generator: Great Ideas to Start Your Small Business.

Lerena, D. C., 2016, Real estate and SWOT analysis, https://www.costainvest.org/en/real-estate-swot-analysis/, accessed on 15^th October 2017.

Li, C.Z., Hong, J., Xue, F., Shen, G.Q., Xu, X. and Luo, L., 2016. SWOT analysis and Internet of Things-enabled platform for prefabrication housing production in Hong Kong. Habitat International, 57, pp.74-87.

Mintzer, R., 2009, 7 Essential start up steps, https://www.entrepreneur.com/article/202106, accessed on 15^th October 2017.

Schaltegger, S., Burritt, R. and Petersen, H., 2017. An introduction to corporate environmental management: Striving for sustainability. Routledge.

Selvaraj, A. and Krishna, N., 2017. Eastern Housing Limited—Marketing Strategies of Real Estate Company in Bangladesh. Vision, 21(1), pp.101-103.

Tsui, A.S., Zhang, Y. and Chen, X.P., 2017. Successful Business through Moral Conduct and Integrity. In Leadership of Chinese Private Enterprises (pp. 225-237). Palgrave Macmillan UK.

Van Wormer, K. and Besthorn, F.H., 2017. Human behavior and the social environment, macro level: Groups, communities, and organizations. Oxford University Press.

Winfree, J.A., Rosentraub, M.S. and Mills, B.M., 2016. Sports finance and management: Real estate, entertainment, and the remaking of the business. CRC Press.

Xiao, Y. and Xu, L., 2017. Business Expanding and Strategic Decision-Making Innovation for Real Estate Valuation Companies Based on Big-Data. In Proceedings of the 20th International Symposium on Advancement of Construction Management and Real Estate (pp. 1057-1068). Springer, Singapore.

Xiao, Y., 2016, January. Sustainable development approach of Chinese home inspection industry based on SWOT analysis. In Sustainable Development: Proceedings of the 2015 International Conference on Sustainable Development (ICSD2015) (pp. 444-454). World Scientific.

Yderfält, Å. and Roxenhall, T., 2017. Real estate business model innovation and the impact of ego network structure. Management Research Review, 40(6).

Zhao, Z.Y., Zuo, J., Wu, P.H., Yan, H. and Zillante, G., 2016. Competitiveness assessment of the biomass power generation industry in China: A five forces model study. Renewable Energy, 89, pp.144-153.