Jones Lang LaSalle popularly known as JLL, is a USA based professional services and investment Management Company working in real estate industry. The company is marketing itself as JLL since March 2014. The global headquarter of JLL is located in Chicago and its operational units are covering the regional market of America. The sub-headquarter of the company is located in London which covers Middle East, Europe, and Africa Regional market and also in Singapore which covers the regional market of Pacific Asia. The services provided by the company include agency leasing, property management, the real estate merchant banking, project, and development management, relationship services, value recovery, sustainability services and consulting and investment services (McCarty & Gottschalk, 2014). JLL Company is the largest publicly traded commercial real estate brokerage company at international level after CBRE Group. Therefore, the firm also has a number of competitors in its environment which affects the productivity and performance of the company in short as well as in long run. Some of the main competitors of JLL Company includes Colliers International, Cushman & Wakefield and Newmark Grubb Knight Frank. This report highlights the analyses of the external competitive environment of the company by using some important tools of external environment analyses. Further, on the basis of the study, some recommendations have been provided that can be used by the company to enhance the capability to manage the competitors. At the end of the report, a conclusion has been drawn to provide an overview of the report that can enable the reader to understand the essence of the entire study (Rastogi & Trivedi, 2016).
External Analysis:
External Analyses of the company is conducted with the help of the PESTLE and Porter’s Five Forces Framework as they influence the working of the company. These factors are discussed below. Along with this, the company should also consider opportunities and threats which have been discussed below in Appendix 1.
The main factors of PESTLE analysis that impact the strategies of the company can be discussed as follows:
More than 90 percent people of USA prefers to purchase the property after analysing all the options provided to them by brokers. JLL can use this advantage by adding more pictures of its assets on the official website so that customers can go through all the options available to them. The USA is one of the leading countries in terms of technology and literate people. JLL can use this strength in maintaining records of the vendors and suppliers, maintaining the required level of stock, fast communication and for designing the projects online in an effective manner. JLL can make effective marketing, advertising and promotional programs to increase the customer awareness about the firm (Kolios & Read, 2013).
One of the major factor is that, the USA is the hub of technological advances where many jobs and functions are being outsourced by the companies to the other countries which reduced production cost and thus results in increasing the overall productivity of the firm. JLL can also use this outsourcing function to develop the designs of the buildings and infrastructure. By this way, the work can also be performed with the perfection (Njambi, et al., 2016).
The investment in R&D department is low in the USA as a percentage of GDP in comparison to other developed countries. It also impacts the processes carried out by R&D department of the company. The department is not engaged in such activities that may provide more ways to increase the customer satisfaction and thus to increase sales. Therefore, the company needs to invest in its research processes related to customer preferences and their compatibility (Kozlinskis, 2016).
New infrastructure development plan of the USA including high-speed road projects and metro projects will also facilities higher development of the real estate industry. JLL is able to take advantage of new and innovative environmental changes by commencing new projects near to metro projects and roads. It will automatically result in increasing the prices of the property. For this purpose, the company will have to consider the new economic policies of the government (Taherkhani, et al., 2012). The development in the infrastructure of the country will automatically result in increasing the prices of the property. The USA has highly diverse climate conditions, geography and wildlife. This attracts a billion of customers every year. The country has the educational and technological advancements that attract the students and professionals too. The USA also has major visitor attractions that provides an opportunity to real estate industry to increase the sales. It will also increase the rate of the property because many people are migrating to such places and are willing to invest in properties located near such attractions (Ho, 2014).
In order to take advantage of such increase in the number of students and professionals, JLL can invest in the projects like hostels and hotels by proving to pay guest and tenant facility to the persons who are not willing to live there permanently. For this purpose, the company need to analyses the environmental conditions and also need to analyse the season and time in which most of the visitors prefer to visit there (Gupta, 2013).
Invest in R&D:
The managers of R&D department is required to concentrate more on the technological developments which are preferred by the citizens of the country as well as the foreigners. After analysing such advancements, same facilities should be provided to the customers so that they can be able to compare the services with other companies. This work can also be outsourced to the professionals of other countries JLL is a well-known firm in real estate industry therefore, it will be easy to take grant for funds from the government for the purpose of making the investment in the research and development projects. This will help the company to overcome the financial burden because of making investment in R&D department (Lai & Lin, 2015).
Diversification:
Along with this, the company is required to construct its buildings and societies near to the international level colleges in the USA so the students from foreign countries may get attract towards the facilities nearby their colleges.
Considering the environmental damages:
The company should also be concerned about the fact that at the time of constructing buildings and apartments, natural resources like water, soil, plants may not get damages. It is a well-known fact that at the time of construction, a company needs a piece of sphere land, but the company also should take care that in case of unavailability of land, the company should not adopt the alternate ways like cutting plants and forests (Bolivar, et al., 2010).
The company should outsource its function like developing and designing project planning and infrastructure development plan to get the work done by professionalized knowledge.
Rivalry:
The strength of rivalry among the competitors of JLL in residential development is considerably low. The area in which the company is facing more competition is the development of land. Because when it comes to selling the end units, developers often try to ignore competing directly either by developing products in different markets and introducing products at the different time. The developers sometimes also use the differentiation in product types (Jaradat, et al., 2013).
The main factor is that the adequately differentiable product is not the subject to any kind of technological obsolescence and perishability so that developers have sufficient time for production and selling their product and also in the desired manner (Indiatsy, et al., 2014).
Threats of New Entrants:
To enter into the industry of real estate business, no any special authority or permission is required to anyone. Therefore, there is no any obligation form the legal perspective that can resist a person or organization to enter into real estate industry. Similarly, a person also does not need any high expertized knowledge of technology that can prevent him to enter into this industry (Enders, et al., 2013). The main barrier that may prevent an organization to enter into this industry is the capital. An individual or an organization is required to have financial stability and also should have the ability to raise finance from various financial resources. At present, JLL has some competitors in the industry like CBRE and Colliers International which are providing strong completion to the firm. The company is required to command its activities in some key areas so that entrance of new firms cannot affect its customer base (Mathooko & Ogutu, 2015).
Threat of Substitutes:
Real Estate industry is always high in demand because of two main reasons. The first one is to utilize it for accommodation purpose and the second one is for making it a valuable investment. Thus there are a number of competitive products that are being provided by the Colliers International and other competitors. Such competition from other firms can be treated by introducing product differentiation strategy by the company with the high quality of management services. JLL can also take an advantage of the needs of those people who are willing to take property on rent. The company can provide such accommodations with low investment. There can also be some other strategies that can be sued by the company to deal with the substitutes available in the industry. JLL is also required to develop its strategy and should use the technological advancements to provide some unique features with its products and services. It will not impact the profitability of the firm irrespective of the availability of substitutes or variety of products (Omsa, et al., 2017).
Bargaining Power of Suppliers:
Bargaining power of suppliers in real estate industry is favourable for the JLL Company. Although there are many organizations are providing same services, but still, the bargaining power of suppliers is not so strong. It means the suppliers of the real estate industry are not able to pressurize the price of property due to the availability of a number of buyers. There are four main suppliers in the real estate industry which can be distinguished as the land sellers (developers and government), capital providers, construction contractors and home furnishing and building material manufacturers. This force from Porter’s Model creates a favourable situation for JLL Company as it does not need to pay more to acquire the property for the purpose of further development (Binovska, et al., 2018).
Bargaining Power of Buyers:
The bargaining power of buyers depends upon the stage of industry cycle, government regulations and laws related to the protection of consumer’s interests. It also depends upon the financial condition of the developers. During the peak season of industry cycle, the buyer’s bargaining power is no more effective and JLL is able to sell its products and services at high rates. But during the lean stage of industry cycle, the firm has to bear the bargaining power of buyers up to some extent. But it is a well-known fact that market of real estate industry can never get impacted to a great level because this is the only industry where prices are regularly increasing due to increase in population. JLL Company can get benefitted to this favourable fact of the industry (Tehran & Rahmani, 2014).
On the basis of above analyses by using Porter’s Five Forces Framework, it can be said that Jones Lang LaSalle has a number of strengths in favourable areas which can be used by the management to bring stability and enhancing the business.
Competitor Analysis:
On the basis of the understandings form technological and environmental factors and Porter’s Five Forces Framework, competitor’s analyses for JLL Company can be performed as follows:
The largest competitor of JLL Company is CBRE Group. It is the leading firm providing its services in Real Estate Industry. The analyses of the capabilities, strategies, functions, and objectives can be done by studying below mentioned table:
|
Current and future objectives. |
The current objective of CBRE Group includes maintaining its position in the real estate market and future objective includes the introduction of new products and services with the help of technological advancements. |
|
Current Strategy |
Provide unique services to the customers and lead innovation. |
|
Resource Profile |
Resources are available in large number because of availability of sufficient cash and capital. |
|
Future Strategies |
Grab the opportunities prevailing the industry and taking advantage of soft rules and regulations of the government of different countries. |
CBRE is a well-reputed company in Real Estate Sector. It is currently working with the objective of maintaining its sustainability in the real estate industry. For this purpose, it is continuously providing attention to the training and development of its human resources as well as making an investment in its research and development department. This makes it, a leading company in the industry. The company is having sufficient funds available all time so that it can arrange all resources within proper time frame according to the demands of the customers. Along with this, the company also have effective operational strategies that are assisting in the growth of the firm (Wachter, 2016). The company is working with the future objective of becoming a real estate service provider by providing new and innovative products with the help of proper utilizing of technological advancements. For this purpose, it is continuously working on formulating the new business strategy that may cover all the future objectives of the organization.
(JLL, 2018)
On the basis of above analyses, it can be recommended that JLL needs to step out from its comfort zone and should introduce some products that are not pre-launched or tested by any other competitor. The company is required to frame its strategies after analysing the strengths and weaknesses of its main competitors like CBRE so that strategy can result in increasing the profit and productivity. The management of JLL should also study the current strategy followed by the CBRE group which can help it to know the steps that need to be followed to become the leader in the industry.
Conclusion:
On the basis of above study, it can be concluded that JLL Company is working very well in the global real estate industry. There are a number of competitors available in its external environment that is regularly impacting the performance of the company. Although there are some favourable factors also exist in the environment that can be utilized by the company to increase its profitability and productivity. The real estate market is a perfect competition market, therefore JLL Company is required to take every step after analysing the impact of such step.
References
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