Strategic Management of Real Estate Firm

Subject :
g Management
Strategic g in Real Estate
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
success factor for success of firm in longer run
& needs special attention to be given.
Unlike other industryy construction industry

y
posses complex business structure, hence direct
implementation of strategic management
which
hi h iis proven and
d established;
bli h d may not
ensure desired results.
By- Viral Soni, MTech Construction &

Ahmedabad
To identify the current strategies followed in
construction industry.
To formulate alternative strategy to overcome

bottlenecks and to identify
y action required
q for
implementation 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,
goal as differential from tactics or immediate
action with resources at hand.
Strategic
g Management
g – It is the p
process of specifying
p y g an
organization’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
g run in the nature and p
long provides the organization
g with a road
map.
The term Strategic Management is used synonymously with the

term strategic planning.
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.

Ahmedabad
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
executed
d within
i hi the
h organization.
i i

Ahmedabad
According to Chinowsky & Meredith, Technology,
communication and market advances are fundamentally
changing the global perspectives of time,
time distance and
spatial boundaries.
Two decades ago organizations could identify themselves as
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.
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
times. Chinowsky & Meredith also referred to three issues
which demands need of strategic management in
construction organizations knowledge workers, new
markets and information technology.
technology
Ahmedabad
According to shah, the number of variables to be
considered
id d in i the
h decision
d i i makingki process is i
increasing. Production and other management systems
and related technologies become obsolete within a
short span of time.
time
More reliance to be placed on creativity, innovation
and new ways of looking at the organization in the
world we exist.
exist Strategic management sets the major
direction for the organization i.e. mission, major
products, services to be rendered and major market
segments
g to be served.
The strategic management is the major vehicle for
planning and implementing major changes an
g
organization must make.
Ahmedabad
Concept of Strategy :
According to Langford & Male, management theorists agree

that strategy deals with the means and organization uses to
meet ends.
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
g team or spread
p across the
organization and produce a sense of common direction or
purpose.
According
A di to t Chinowsky
Chi k & Male,
M l strategy
t t is
i defined
d fi d as the
th
underlying concept that responds to, or anticipates, industry
conditions for the purpose of developing long term plans.

Ahmedabad
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 practices.
practices
Core competencies – The Business boundries for an

organization does best and where its strength resides.
resides
Knowledge Resources – The Combination of human and

technology
gy resources that p
provide the backbone for
completing organization projects.
Ahmedabad
Education
d – A Focus on the
h information
f and
d formal
f l requirement
for lifelong and understanding of evolving business conditions.
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
domains
i that
h are related
l d to core competencies.
i
Competition – A focused analysis and understanding of existing,

emerging and future competitors in both existing and potential
market segments.
Strategic Management can be pictured as a series of above

segments within
i hi an overall
ll structure.
Ahmedabad
According g to Oluwoye,
y , Crawford and Faniran,,
Strategic planning is the process of establishing
long-term corporate plans for achieving them
within
ithi the
th prevailing
ili environment.
i t
The typical Strategic planning process in
construction firms consists of: defining corporate
objectives, conducting internal and external
appraisals of company’s
y business environment,
developing a strategic plan, Implementing the
strategic plan, monitoring the plan during the
implementation and reviewing where necessary.
necessary
Ahmedabad
Establish Corporate Objectives
Monitor and
Review Plan
Conduct internal Conduct External
Appraisal of firm’s Appraisal of threats and
strength and weakness opportunities in firms
business environment
Develop
Strategic Plan
Implement Strategic
Plan
Ahmedabad
According to Langford & Male, Innovation is one of the key issues
in sustained competitive advantage.
advantage Forms & Methods of
construction are largely in the hands of the designers.
Designers
g p
provide the spatial
p and structural form,, specification
p
and 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
p g chosen.
Innovation in Construction plant, forming part of the technical

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

Ahmedabad
The primary areas for direct innovation with
contractors are:
On site level through the organization of production. Where

there
h iis a considerable
id bl potential
i l ffor pre-fabrication
f b i i off-site
ff i
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.
At Company level by responding to client with new services

and new forms of corporate
p organizational
g design.
g
In Financial Management.

Ahmedabad
Types of Innovation
Technologies Innovation
Organizational Innovation
Production Innovation
Process Innovation

Ahmedabad
Barriers to innovation and learning
According to Turner, There are many barriers to innovation and learning for
any organization.
Competency Traps
Fear of failure
Fear of blame
Fear of innovation stealing by competitors
Rigid control procedures block innovation :
Following rigid procedures in construction industry acts as block to

innovation.
Rigid evaluation criteria
Rigid resource utilization
Rigid control
Ahmedabad
According to Teague, A dynamic vision and a well defined
strategy will count for nothing if execution is lacking; Change is
about execution. Successful companies do not strategize their
competitors, 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, on and
Those strategic elements that relate to how things should be

changed – which amount to ‘projects’
projects in one way or another
another.
Ahmedabad
Formulate
Establish Business As
Strategy/ Usual (BAU) Targets
Vision
Define Obejctives
/ Goals
Define change
D fi h
Initiatives/
Deliverables
Establish
Strategic Establish
Prioritised Project
Priorities dependencies &
Portfolio
Constraints

Ahmedabad
Construction Industry specific strategies(According to Indian Context) is
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

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

implement indentified strategies.
Evaluation Criteria are to be identified for each implementation step of

strategic.
strategic
Impact of strategy on overall organization & its efficiency in order to

achieve defined mission of firm is to be evaluated.

Ahmedabad
Chinowsky, P. and Meredith, J. (2000), “Strategic Management in Construction” Journal
of Construction Engineering & Management (Jan Feb 2000) pp 11-9.
(Jan-Feb 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,
y JJ., Crawford, L. and Faniran, S. ((2005),
) “Strategic
g Planning
g Practices in
Construction 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.

Ahmedabad
Ahmedabad
Identify The Present
Strategy Objectives
Analysis
Yes
Is the Strategy OK?
No
Generate Alternatives
Repeat Evaluate and Choose The Choose

Future Strategy
Future Strategy
Implement
Review the Results Implementation

Strategic Management
Ahmedabad Process
Company Mission
What is
What is Possible
What is Possible
External
Company Environment
Profile
Desired Operating Env.
Strategic analysis and choice
Feedback
Long Term Objectives
ong Term Objectives Grand Strategy
Grand Strategy Feedback
Annual Objectives Operating
Policies
Strategies
Institutionalization of
Strategy

Constrol and evaluation
Strategic Management Model
Ahmedabad
Ahmedabad
Ahmedabad
Land Proposal
Check the legal papers and search report through
If Prima facie promising No

Avoid
A id
yes the Deal
Any idea of joint venture
Technical feasibility
Market Research
Source of funding
Is project worthwhile?
Finalize the type of Project
Focus on price people Acceptance of

By- Viral Soni, MTech Construction & proposal
Feasibility of the Project Manageent, CEPT University,
Ahmedabad
Project
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.
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
g state-of-the-art development
offering p and construction.
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
country. Through the years,
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-the-
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
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, Parsvnath

is steadfastly focused on continuing to create and build
p
dreamspaces that transform lives and the world around them – be
it 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
p
special economic zones.
Ahmedabad
Savvy Group of Companies consists of Savvy
Infrastructure
I f Limited,
Li i d S Savvy Construction
C i company,
Savvy Infrastructures Company, Savvy Homes
Co.,Savvy Organizers and Savvy Realty and
Infrastructures Pvt.
Pvt Ltd.
Ltd
Savvy takes pride in the Buildings it builds, so the

customers
u t m r are
r proud
pr ud tto b
be a p
part
rt off S
Savvy Gr
Group
up off
Companies.
Savvy Group
S G off C
Companies
i isi the
h brainchild
b i hild off iits
Directors Jaxay Shah, Sameer Sinha & Jigish Shah;
three classmates from engineering college who had a
dream to change the landscape of Ahmedabad.
Ahmedabad
Ahmedabad
After g
graduatingg from L. D. College
g of
Engineering, all three gained valuable experience
working in brick and mortar construction
companies both in India as well as abroad, before
returning
i home
h to set up ‘Savvy’
‘S ’ in
i 1996.
1996
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
decade Savvy established a strong and reliable
reputation in the densely saturated construction
market of Ahmedabad.
Ahmedabad
Discription/
Parsvnath Developers Savvy Infrastructure
Company
Head office Delhi Ahmedabad
B
Branch
h Offices
Offi Hyderabad,
H d b d Goa,
G Ch
Chandigarh,
di h Jammu,
J ______
Ahmedabad, Banglore, Cochin, Jaipur,
Chennai, Dehradun, lucknow
Age of firm 23 12
(Years)
Diversification National ( 51 Cities) Local (Ahmedabad only)
Ownership Listed on Both Exchanges (BSE/NSE) Owned by three Private Partners

Ahmedabad
Discription/
Di i i /
Company
Vision Vision of a better world From the beginning, the company
Our vision statement can be encapsulated strived for uncompromised quality,
in our corporate philosophy and motto of unequaled architectural designs, and
`building a better world’. To envision, conscientious attention to details of
design and construct the most the building process in every Project
magnificent landmarks and edifices; to they built.
contribute
t ib t ttangibly
ibl iin regional
i l and
d E h project
Each j t combines
bi th
the vision
i i
national development by way of key of Savvy Group of Companies with
infrastructure projects, and to protect and that of their clients by articulating
preserve the environment we live in. their dreams and bringing them to
At the end of the day,
y our vision is about reality.
y
making the world a better place to live in; Purchasers are informed and
to transform and uplift quality of living involved in every step of the
and lifestyles of each and every construction process.
individual that comes in contact with us. Communication and
commitment to detail before
before, during
and
after the closing are part of the
recognition earned by Savvy Group
of Companies.

Ahmedabad
Discription/
Company
Mission Committed to build a better world To provide “more” value for money to our
To cater to the real needs of a growing population customers.
To set standards and improve our environment To make safe, clean, efficient and
Offer a wide portfolio of international quality technologically advanced buildings
products that cater to different markets and To take utmost care & design buildings
segments from the inside out.
To deliver value for money and excellent To provide sound building utility
investment returns systems, which form the backbone of our
Take customer relationships and customer buildings.
satisfaction to new levels To provide an aesthetically superior
To focus on strategic growth facade to the buildings.
Evolve contemporary benchmarks in construction To provide high level of building
and marketing practices maintenance after it is complete and sold.

Ahmedabad
Discription/
Company
Type of IT Park., Townships, Residential, Residential, Commercial, Sports
Projects
j Commercial, Star Hotels, SEZs, Retail Club
Handled
Target Market Mass (Upper lower to Upper Upper) Niche (Upper Upper/Corporate)
Number of 114 4
Current Project
JV/MOUs SAN JOES No Major JVs other than Local Land

ICLEI (International Council for Local Owners
Environmental Initiative)
GUDC (Gujarat Urban Development
Company Limited)
Competitors Purvankara Developers Safal Group

Omaxe Ltd Sharanam Devlopers
Sobha Devlopers
Brigade Devlopers
Ahmedabad
Discription/
Company
Certifications ISO 9001 ISO 9001:2000
ISO 14001 CRISIL DA3+
OHSAS 18001
Use of MIS Yes Yes

ERP Yes Yes
Implemented
Corporate
p General Donations Schools at site
Social Labour welfare Canteen & Subsidised Food for
Responsibility Labours
Medical Facility to workers
Total Area Built 102.11

102 11 million sq.
sq ft 1 7 million sq ft
1.7
till date
PAT 271.7 Cr 6.16 Cr

((March 07))
Sensitivity to Moderate Low
External
Economic
Environment

Ahmedabad
Ahmedabad
Mar '04 Mar '05 Mar '06 Mar '07 Mar '08
Sales Turnover 112.15
112 15 303.21
303 21 643.83
643 83 1,236.14
1 236 14 1,726.25
1 726 25
Excise Duty 0 0 0 0.00 0.00
Net Sales 112.15 303.21 643.83 1,236.14 1,726.25
Other Income 0.8 3.64 9.93 24.85 65.99
Stock Adjustments 0 0 0 0.00 0.00
Total Income 112.95 306.85 653.76 1,260.99 1,792.24
Expenditure
Raw Materials 0 0 0 0 00
0.00 0 00
0.00
Power & Fuel Cost 0 0 0 8.90 11.31
Employee 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 -107.58

Total Expenses 91.38
Project Manageent, 231.01
CEPT 499.27
University, 879.63 1,142.81
Ahmedabad
Operating Profit 20.77 72.2 144.56 356.51 583.44
PBDIT 21.57 75.84 154.49 381.36 649.43
Interest 0.36 1.05 2.69 19.30 39.11
PBDT 21.21 74.79 151.8 362.06 610.32
Depreciation 1.07 1.43 5.88 14.14 23.78
Other Written Off 0 0.01 0.03 0 0
Profit Before Tax 20.14 73.35 145.89 347.92 586.54
Extra-ordinary items 0 0 -0.12 -5.85 0.28
PBT (Post Extra-ord Items) 20.14 73.35 145.77 342.07 586.82
Tax 1.73 7.44 39.55 70.28 178.08
Reported Net Profit 18.41 65.89 106.25 271.78 408.74
Total Value Addition 91.38 231.02 499.27 879.63 1,142.81
Preference Dividend 0 0 0 0.00 0.00
Equity Dividend 0.7 1.65 6.52 46.17 55.41
Corporate 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 1,846.96
Earning Per Share (Rs) 0 79 94
79.94 10 74
10.74 14 71
14.71 22 13
22.13
Equity Dividend (%) 0 20 20 25.00 30.00
Book Value (Rs) 0 CEPT
Project Manageent, 124.15
University,20.34 79.19 97.81
Ahmedabad
Sources of Fund (Rs in Cr)
12 mths 12 mths 12 mths 12 mths 12 mths
Total Share Capital 8 24

8.24 8 24
8.24 98 91
98.91 184 7
184.7 184 7
184.7
Equity Share Capital 8.24 8.24 98.91 184.7 184.7
Share Application Money 0 0 0 0 0
Preference Share Capital 0 0 0 0 0

Reserves 29.57 94.09 102.24 1277.98 1621.9
Revaluation Reserves 0 0 0 0 0
Networth 37.81 102.33 201.15 1462.68 1806.6
Secured Loans 48.47 120.7 235.85 1011.83 1604.42
Unsecured Loans 0 0 0 0 97.85
Total Debt By- Viral Soni, MTech
48.47 Construction
120.7 &
235.85 1011.83 1702.27
Total Liabilities 86.28 223.03 437 2474.51 3508.87
Ahmedabad
Application of Funds (Rs in Cr)
12 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 45.31
Net Block 4 03
4.03 17 18
17.18 35 63
35.63 71 29
71.29 119 47
119.47
Capital Work in Progress 0 0 17.27 38.73 101.51
Investments 0.28 4.21 4.2 82.86 80.57
Inventories 134.48 235.69 389.42 1341.91 1914.58
Sundry 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
22.32 28 13
28.13 528 31
528.31 403 36
403.36
Total CA, Loans &
Advances 161.39 510.85 892.55 3200.65 4582.87
Deffered Credit 0 0 0 0 0
Current Liabilities 75.57 296.51 454.24 734.77 1013.47
Provisions 3.88 12.71 58.4 184.24 362.08
Total CL & Provisions 79.45 309.22 512.64 919.01 1375.55
Net Current Assets 81.94 201.63 379.91 2281.64 3207.32
Miscellaneous Expenses 0.03 0.03 0 0 0
Total Asset 86.28 223.05 437.01 2474.52 3508.87
Contingent Liabilities By- Viral Soni,0MTech Construction

25.05 & 47.44 119.26 276.87
Book Value (Rs) Project Manageent,
0 CEPT University, 20.34
124.15 79.19 97.81
Ahmedabad
Ahmedabad
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.
Hypothesis check by market survey conducted for
target segment.

Ahmedabad
Propose new strategy for “Savvy
Savvy Infrastructure
Ltd”
Broad level Strategy
gy
Operation level Strategy
Action Required to Implement proposed

strategy
Function Vs Responsibility
b l Matrix.

Ahmedabad
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

Ahmedabad
Ahmedabad
Total Income 112.95 306.85 653.76 1260.99 1792.24
E l
Employee Cost
C 2 49
2.49 4 28
4.28 7 56
7.56 28 73
28.73 54 13
54.13
Other
Manufacturing
Expenses 85.36 221.72 465.79 825.81 1066.56
g and
Selling
Admin Expenses 0 18.16 62.81 101.58 106.59

Ahmedabad
Ahmedabad
Ahmedabad
Sales
Turnover 112.15 303.21 643.83 1236.14 1726.25
N P
Net Profit
fi 18 41
18.41 65 89
65.89 106 25
106.25 271 78
271.78 408 74
408.74

Ahmedabad
Equity Capital +
Reserves 29.57 94.09 102.24 1277.98 1621.9
Total
ota Debt 48.47
8. 120.7
0. 235.85
35.85 1011.83
0 .83 1702.27
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
/ Ratio
D/E 1.64 1.28 2.31 0.79 1.05

Rate of Return 21.34 29.54 24.31
10.98 11.65
Ahmedabad
Ahmedabad
Ahmedabad
Comparatively Low Financial Risk.
Competitive Advantage – Utilization of
Learningg Curve in Operational
p Efficiency.
y
High short term liquidity.
Distributed Market Risk – Having Diversified
Portfolio in product range and location wise.
Organic
g g
growth of over all business y
year by
y
year.

Ahmedabad
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
y Imp
p 4
Imp 3
less Imp 2
Not Imp 1
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
2. External Sources of
F
Finance 3 2 4 3 1 2 5 3 3 1
a
c 33. On site Project
Management 2 3 4 3 3 5 1 3 5 3
t
o
r 4. Timely
y Completion
p 3 4 3 3 3 5 2 4 4 3
s 5. Unique Design 2 4 2 2 5 3 4 4 2 4
6. 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 3
Ahmedabad
Ratings
=FxW/
Factors 1 2 3 4 5 FxW N Rank
1. Aggressive Land
Acquisition Strategy 0 2 1 4 3 38 3.8 1
2 External Sources of
2.
Finance 2 2 4 1 1 27 2.7 6
3. 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
6. 0 3 5 2 0 29 29
2.9 5
7. Competitive Pricing 1 Soni, MTech
By- Viral 3 2
Construction 3
& 1 30 3 4
Ahmedabad
Rank Factors
1 1. Land Acquisition Strategy
2 4. Timely Completion
3 3. On site Project Management
3 5. Unique Design
4 p
7. Competitive Pricing
g
5 6. Quality of Work
6 2. External Sources of Finance

Ahmedabad
Survey Form Format
Q.1 Approperty
p y matching gyyour basic area requirement
q is available
at 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
location?
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 y remote area with reasonably
y
comparable pricing, would you buy it?
A> Yes B>No
Ahmedabad
Q p y is available at very
Q.3 A Property y attractive p g
price range
but carries very standard design and is situated at
under developed location, what would be you buying
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 10,00,000
C> 10,00,000 to 15,00,000
D> Above 15,00,000
Ahmedabad
( 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
p g location.
All three assumptions are then checked as hypothesis by Z test at 95%

Confidence level and 5% error level.
level
Ahmedabad
Question Ho Ztab
Hypothesis Number Yes No thesis Zcal Value Value 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}^0.5

Where p = value projected from survey in terms of %age
P = Value assumed in Hypothesis in terms of %age
n = Size of Sample Survey

Ahmedabad
Ahmedabad
Strength Weakness
• Unique Design Concepts • Products for only high end
• Well identified project location market.(High Priced Projects)
• Focussed target market • Low D/E ratio.
• Very low financial risk • Lack of geographical diversification
• Advance technology orientation • No rare competitive advantage over
other players
Opportunity Threats
• Broad loyal customer base • Current strategy of unique designs can
• Potential to raise Debt easily be imitated by competitors.
• Can Leverage combination of its • High market risk is involved as most of
Technical Know-how and Unique the undertaken projects are premium
Design Concepts to gain rare priced projects and located in same city.
city
competitive advantage
• Geographical Diversification can
explore potential investment
opportunities
opportunities.
Ahmedabad
Proposed Strategy Rare Compititive
Structure Advantage
Broad Level
Strategy
Operational Level Strategy
Functional Functional Functional

Strategy 1 Strategy 1 Strategy 1

Responsible Project Manageent, CEPT University, Responsible
Entity 1 Ahmedabad Entity 2
Competitive Advantage ::-
Project Concepts which are Uniquely Designed,

Designed
Superiorly located & supported with
technological
g know how and continuous
innovations.

Ahmedabad
Develop Brand name in Unique Design and
Premium Projects.
Identify
y future development
p p
pattern and Invest
in Strategic locations.
Increase Debt Leverage.g
Diversify in neighbouring cities within Gujarat.
Develop p in-house designg innovation centre.
Emphasise on Superior quality and use of
advance technology.gy
Ahmedabad
Design Concept
Unique Designs.
Use of Advanced Technology.
gy
Added services to provide more value for money.
Continue with niche market segment
Project Location
Pro actively acquire strategic locations in developing
and
d to
t be
b ddeveloped
l d area.
Aggressive investment in Land pockets across the
various locations.
Diversify in the neighbouring
By- Viral cities
Soni, MTech Construction & in first five year
phase. Ahmedabad
j
Project g ,Q
Management, y and Time duration
Quality
Use comprehensive planning, monitoring and controlling
techniques.
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 project.
project
Finance
à Evaluate possibility of the raising finance from debt sources.
à Increase D/E ratio to support diversification.
à 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
g Recruitment and Training
gpprogram.
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
Responsible entity
Sr
Projec
GM‐ GM‐ Legal Structu
SR. Function GM ‐ Chief t
BOD CEO CFO Marketin GM‐HR Operati Consulta ral IT
BD Architect Manag
g ons nt designe
ers
r
1 Strategy Formulation √ √ √
2 Increase Debt leverage
g √ √ √ √
Develop In House
3 Innovation Centre √ √ √ √ √ √ √
Unique Design √ √ √ √ √
4 Concepts Development
Identify Future √ √ √ √
5 Development Pattern
6 Develop a Land Bank √ √ √ √ √
Achievng Superior
7 Quality Standards
Q li S d d √ √ √ √ √ √
Diversification in other
8 Cities √ √ √ √ √ √ √ √ √
Project Management & √ √ √ √ √ √ √ √
9 Timely Completion
y p
Developing Strong
10 Brand loyalty √ √ √ √ √ √ √ √
Building Technical
11 Knowledge Bank √ √ √ √ √ √ √
Projecting Financial
f
performance & & √ √ √ √ √ √ √ √
12 Financial Reporting
Ahmedabad
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 iis li
Study limited
i d ffor local
l l environment
i off the
h
city and proposed strategy is specific to the
studied organization.
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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Strategic Management of Real Estate Firm

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Subject :

Prepared By - SONI VIRAL S.

CEPT University, Ahmedabad.

 Unlike other industryy construction industry

By- Viral Soni, MTech Construction &

 To formulate alternative strategy to overcome

 To suggest actions required to implement the

 The term Strategic Management is used synonymously with the

By- Viral Soni, MTech Construction &

 Strategy Implementation – It involves the

By- Viral Soni, MTech Construction &

 According to Langford & Male, management theorists agree

By- Viral Soni, MTech Construction &

 Strategic Management in the context of the construction

 Vision, mission and goals – The starting point for all

 Core competencies – The Business boundries for an

 Knowledge Resources – The Combination of human and

 Finance – A broad focus on monetary concerns beyond the project

 Market – The analysis of expanded business opportunities within

 Competition – A focused analysis and understanding of existing,

Strategic Management can be pictured as a series of above

 Innovation in Construction plant, forming part of the technical

By- Viral Soni, MTech Construction &

 On site level through the organization of production. Where

 At Company level by responding to client with new services

By- Viral Soni, MTech Construction &

By- Viral Soni, MTech Construction &

Rigid control procedures block innovation :

Following rigid procedures in construction industry acts as block to

 strategy if not implemented properly then holds no value to

 Those strategic elements that relate to ongoing operational

 Those strategic elements that relate to how things should be

By- Viral Soni, MTech Construction &

 Barriers to strategic management in construction industry & reasons for

 Work plans with responsibility matrix are to be drawn down in order to

 Evaluation Criteria are to be identified for each implementation step of

 Impact of strategy on overall organization & its efficiency in order to

By- Viral Soni, MTech Construction &

 Kale, S. and Arditi, D. (2002), “Competitive Positioning in United States Construction

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

By- Viral Soni, MTech Construction &

Repeat Evaluate and Choose The Choose

By- Viral Soni, MTech Construction &

By- Viral Soni, MTech Construction &

Check the legal papers and search report through

If Prima facie promising No

Finalize the type of Project

Focus on price people Acceptance of

 Parsvnath Developers Limited is one of India’s leading real estate

 Over the past two decades, Parsvnath Developers Limited has

 With a pan-India presence in over 51 cities in 18 states, Parsvnath

 Savvy takes pride in the Buildings it builds, so the

 Savvy Group of Companies was conceived as a

Head office Delhi Ahmedabad

Diversification National ( 51 Cities) Local (Ahmedabad only)

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

By- Viral Soni, MTech Construction &

By- Viral Soni, MTech Construction &

By- Viral Soni, MTech Construction &

JV/MOUs SAN JOES No Major JVs other than Local Land

Competitors Purvankara Developers Safal Group

Use of MIS Yes Yes

Total Area Built 102.11

PAT 271.7 Cr 6.16 Cr

Unlike other industryy construction industry

To formulate alternative strategy to overcome

To suggest actions required to implement the

The term Strategic Management is used synonymously with the

Strategy Implementation – It involves the

According to Langford & Male, management theorists agree

Strategic Management in the context of the construction

Vision, mission and goals – The starting point for all

Core competencies – The Business boundries for an

Knowledge Resources – The Combination of human and

Finance – A broad focus on monetary concerns beyond the project

Market – The analysis of expanded business opportunities within

Competition – A focused analysis and understanding of existing,

Innovation in Construction plant, forming part of the technical

On site level through the organization of production. Where

At Company level by responding to client with new services

strategy if not implemented properly then holds no value to

Those strategic elements that relate to ongoing operational

Those strategic elements that relate to how things should be

Barriers to strategic management in construction industry & reasons for

Work plans with responsibility matrix are to be drawn down in order to

Evaluation Criteria are to be identified for each implementation step of

Impact of strategy on overall organization & its efficiency in order to

Kale, S. and Arditi, D. (2002), “Competitive Positioning in United States Construction

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

Parsvnath Developers Limited is one of India’s leading real estate

Over the past two decades, Parsvnath Developers Limited has

With a pan-India presence in over 51 cities in 18 states, Parsvnath

Savvy takes pride in the Buildings it builds, so the

Savvy Group of Companies was conceived as a

Interpretation of financial statements of successful

Action Required to Implement proposed

Project Concepts which are Uniquely Designed,

Marketing & Sales

Develop strong brand loyalty.

Comprehensive title clearance checks before entering into the project.