Real Estate Industry Analysis

The assignment requires analyzing the real estate industry using a framework that involves characterizing current trends, future trends, and degree of concentration among sellers. It also considers factors such as rate of industry growth, significant cost differences, excess capacity, sensitivity of costs to capacity utilization, product differentiation, brand loyalty, cross-price elasticity, buyer's costs of switching, observability of prices and terms, ability to adjust prices quickly, large and infrequent sales orders, use of facilitating practices, history of cooperative pricing, strength of exit barriers, and high industry price elasticity of demand. The analysis aims to identify patterns, similarities, or differences among the real estate companies and provide a comprehensive understanding of the industry.

Running head: INDUSTRY ANALYSIS FOR REAL ESTATE
Industry Analysis for Real Estate
Name of the Student:
Name of the University:
Author’s Note:

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INDUSTRY ANALYSIS FOR REAL ESTATE
Executive Summary
This report is constructed in order to provide an idea about the real estate business and the
industry that is operational in United States of America. The real estate business in USA is very
prosperous and high demand for their products and services have led to a rise in internal rivalry
within the real estate sector. This report has provided an insight of the various factors that have
affects the internal rivalry within the industry. The strategies and plans that have been
incorporated by the companies within the real estate sector are even addressed. The forces that
can mitigate the competition is explained and in this respect the plans and the strategies that IMT
Residential, a real estate company in USA can incorporate in order to weaken their level of
competition is even explained vividly in this report.

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INDUSTRY ANALYSIS FOR REAL ESTATE
Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................4
Some of the strategies that IMT is doing in order to mitigate the competition:..............................6
Conclusion.......................................................................................................................................8
Reference List..................................................................................................................................9
Appendix........................................................................................................................................11

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INDUSTRY ANALYSIS FOR REAL ESTATE
Introduction
In the modern world, there are several industries that are operational and each one of
them have their definite operational activities with the help of which they are able to operate in
the economy. Out of all these industries, real estate industry is one of the demanding sector in
United States of America. There are several companies that fall under this sector and they are
mainly concerned with constructing household and commercial buildings that can be used for
commercial and domestic purposes (Barclay et al., 2017).
The real estate industry is a huge business that generates billions of dollars in yearly and
there are abundant opportunities for the entrepreneurs to gain profit. In the last year, there are
around 210,000 organizations that are functioning in the residential brokerage and in the field of
management, which has been able to generate $200 billion as revenue.
Real estate is an industry that is cyclical in nature and even reacts to the macroeconomic
patterns like the growth of the population, rate of interests and strength of the economy. The low
level of interest rates for the home loans in the country permits the real estate industry to
develop. There are several factors that are having an impact on the development of the real estate
property management this paper would look to discuss on these aspects in order to have an
understanding of the key factors that are having an impact on the real estate business and the
forces that would be taken in order to mitigate these forces (Zhang et al., 2015). A strategy that
can be implemented by IMT Residential would even be addressed in this paper.

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INDUSTRY ANALYSIS FOR REAL ESTATE
Discussion
The real estate industry is a growing business and the companies are looking to provide
new and improved services with the help of which they are able to attract new customer base
(Andonov et al., 2015). There are numerous factors that are having an impact on the operational
factors of the real estate business and the key factors that are having an impact on the concerned
business needs to be evaluated.
IMT Residential is a nationwide leading operator of the apartment that has their portfolio
extending in all parts of United States. The organization is one of the leading real estate dealers
in USA and therefore the strategies that can be incorporated within this organization in order to
enhance their operational activities are essential. In the real estate industry, there are several
internal and external factors that affects the operational activities and assessing the same would
be done with the help of Porter’s 5 Forces Analysis.
The Porter’s Five Forces model is a mechanism for the assessment of the level of
competition in the business. It draws from the economics of the industrial organization in order
to arrive at five forces that ascertains the competitive intensity and hence the attractiveness of an
industry in accordance to their profitability. The 5 forces depicted in the Porter Analysis are:
 Bargaining Power of the Suppliers
 Threat of new entrants
 Threat of Substitutes
 Bargaining power of the buyers
 Competitive Rivalry

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INDUSTRY ANALYSIS FOR REAL ESTATE
The evaluation of the current real estate industry has addressed that one of the most
significant forces that are having an impact on the real estate business is the competitive or
internal rivalry that is existent among the organizations that are functioning within this sector.
Competitive Rivalry: In the current time period, there is several real estate companies that are
operational in USA and each one of them have the goal of increasing their customer base and
increase their share in the market. The availability of high demand in the market for the real
estate products and services has led to the rise in the level of competition (Liu et al., 2016). The
availability of extensive level of competition has seen the development of new and improved
strategies and plans with the help of which newer services are delivered to their customers. The
rise in the level of competition in this sector has mainly been due to the balance of the power,
differentiation in the product that is being offered and the supply and demand that is seen in the
market (Gibb, & Zhang 2017). As the rival companies in this industry are high, their powers are
even at similar level. The main reason for the similarity in power among the companies is
because the difference between the real estate products is very low and there is an oversupply of
their products in the market. The other reason for the existence of intense competition in the US
real estate sector is the presence of price wars among the competitors. The war with respect to
the construction of price is in accordance to the area where the apartment is located and the size
of the apartment. The real estate industry in order to enhance their sales in the market creates an
advertising war where it is seen that different real estate companies have framed innovative
advertisements in order to brand their products and accordingly attract customers. The
organizations in this sector in order to enhance their competitive edge has the intention of
providing attractive discounts to their customers on booking the apartments early and even
provides loan options to their customers (Sawyer et al., 2014). The development of the products

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INDUSTRY ANALYSIS FOR REAL ESTATE
and improved service quality has been several factors with the help of which competition in this
sector has been increasing (Schrand et al., 2017). The companies have been incorporating
innovative products like offering swimming pools, community halls, gyms etc within the
apartment premises so that the residents can gain various features all under one roof and need not
go out for obtaining these facilities. The payment of a minimum charge is sufficient for the
residents to gain access to these amenities.
In order to mitigate or weaken the issues that have been addressed, the real estate
organizations can implement several forces and strategies that are available to them in order to
improve their operational activities and develop their competitive edge and profit (Holmes,
2017). One of the key forces has been taking valuable feedback from the market so that the
demands in the market can be understood and incorporation of the same can be possible even
before the other companies thinking of the same. The other force has been assessing the plans
and strategies that have been incorporated by the rival companies and thereafter understanding
the changes that can be made in order to enhance their operational plans (Javadpour, & Khazaeli
2015).
Some of the strategies that IMT is doing in order to mitigate the competition:
IMT has the main aim of satisfying their customers and therefore their customers are their
first priority. IMT Residential has the slogan of “Putting You First”. Therefore, feedback from
the customers is a valuable source for IMT. On a quarterly basis, a survey system is generated
and this survey mail is forwarded to their customers in order to receive their priceless feedback
and opinion as to what changes can be made in their operational activities and how the company
is performing currently. IMT provides discounts and attractive offers to their customers who are
opting for long term leases. IMT values their customers and therefore forwards Birthday

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INDUSTRY ANALYSIS FOR REAL ESTATE
greetings to their customers, Move-In Welcome, New Pet Welcome, Lease Renewal Thank You
mails etc to their clients. IMT value the needs of their clients as clients are like a family to them.
Most of the IMT apartments are luxurious and are pet-friendly and therefore is attractive for any
residents. However, in order to maintain these operations active and smooth, it is essential for the
company to understand the demand and the taste of the consumers on a frequent basis and
construct plans and policies accordingly in order to bring in new and improved products and
services for their clients (Gountas et al., 2014). IMT needs to monitor and evaluate their internal
mechanisms and controls on frequent basis with the help of which the internal activities and
discrepancies that are present can be identified and thereafter rectified. The continuous
monitoring of their internal controls even aids the management to construct future projection of
the business and thereby develop their business further.

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INDUSTRY ANALYSIS FOR REAL ESTATE
Conclusion
The report has been able to address the factors that have an impact on the real estate
business of United States. The paper has been able to address the factors and accordingly
highlight the key factor that is related to it. On the other hand, the factors behind this key factor
is even addressed with the help strategies have been constructed that can be implemented by the
real estate companies especially IMT Residents in order to enhance their competitive edge.

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INDUSTRY ANALYSIS FOR REAL ESTATE
Reference List
Andonov, A., Eichholtz, P., & Kok, N. (2015). Intermediated investment management in private
markets: Evidence from pension fund investments in real estate. Journal of Financial
Markets, 22, 73-103.
Barclay, M. J., Heitzman, S. M., & Smith, C. W. (2017). Leverage and Taxes: Evidence from the
Real Estate Industry. Journal of Applied Corporate Finance, 29(4), 86-95.
Gibb, S., & Zhang, S. (2017). Guanxi influence and talent management in Chinese organisations;
evidence from the real estate sector. Human Resource Development International, 20(1),
79-98.
Gountas, S., Gountas, J., & Mavondo, F. T. (2014). Exploring the associations between standards
for service delivery (organisational culture), co-worker support, self-efficacy, job
satisfaction and customer orientation in the real estate industry. Australian Journal of
Management, 39(1), 107-126.
Holmes, K. (2017). IREM Foundation updates its mission statement. Journal of Property
Management, 82(2), 46-47.
Javadpour, L., & Khazaeli, M. (2015, January). Business Intelligence in the Real Estate Industry
and Effect of Data Analytics Adoption. In IIE Annual Conference. Proceedings (p. 2212).
Institute of Industrial and Systems Engineers (IISE).
Liu, Z., Huang, S. S., Hallak, R., & Liang, M. (2016). Chinese consumers' brand personality
perceptions of tourism real estate firms. Tourism Management, 52, 310-326.

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INDUSTRY ANALYSIS FOR REAL ESTATE
Sawyer, S., Crowston, K., & Wigand, R. T. (2014). Digital assemblages: evidence and theorising
from the computerisation of the US residential real estate industry. New Technology,
Work and Employment, 29(1), 40-56.
Schrand, L., Ascherl, C., & Schaefers, W. (2017). Gender Diversity and Financial Performance:
Evidence for US Real Estate Companies (No. eres2017_48). European Real Estate
Society (ERES).
Zhang, X., Wu, Z., Feng, Y., & Xu, P. (2015). “Turning green into gold”: a framework for
energy performance contracting (EPC) in China's real estate industry. Journal of Cleaner
Production, 109, 166-173.

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INDUSTRY ANALYSIS FOR REAL ESTATE
Appendix
Components Characterization (Current)
Trend
Future Trend
Degree of concentration of the
sellers
Medium. There are several
sellers and therefore the
company needs to make plans
and policies in order to
concentrate on the sellers
No change
Rate of Industry growth High.
Demand in the industrial sector
is high as the development of
the new apartments and
buildings are existent
High
The demand would rise with
economic development and rise
in the level of population
Significant cost differences
among the companies
Low
The cost differences is very low
because of the fact that
competition is very high
Remains unchanged
Excess capacity Yes
The industry has the capacity to
optimize their level of
production
Remains Unchanged
Cost Structure of firms:
Sensitivity of costs to capacity
utilization?
The cost is based on the amount
of capacity that is utilized.
Remains the same

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INDUSTRY ANALYSIS FOR REAL ESTATE
Degree of product
differentiation among the
sellers? Brand Loyalty to the
existing sellers?
Cross price elasticity’s of
demand among the competitors
in industry?
Product differentiation is done
with the addition of new
features and qualities.
Brand loyalty is not significant
due to rise in competition and
development of new products
and services. Cross price
elasticity is positive
Product differentiation would
increase and accordingly brand
loyalty may rise as well.
Cross price elasticity remains
unchanged.
Buyer’s costs of switching from
one competitor to another?
High High
Are the prices and terms of sales
transactions observable?
Yes.
A clear and lucid framework is
maintained with the help of
which all the transactions and
the terms of agreements are
disclosed
Yes.
Remains the same
Can firms adjust prices quickly? Yes.
The price is on the hands of the
sellers as no regulations have
been framed by the government.
Remains unchanged
Large and infrequent sales
orders?
Low.
The sales orders are precise and
timely and infrequencies are not
observed
There are chances of sales
frequencies because of the
changes in the mindset of the
consumers.
Use of “facilitating practices” Is not currently existent Remains unchanged