Dormus Development was involved in the building of residential houses with its main headquarter in London (Furgiele, 2015).
Corporate Strengths and Weaknesses
Domus Development, a family-owned company, had several strengths and weaknesses. The main strength that the company has is that it is in a position to grow and expand in a fast way. The company was able to earn an excellent reputation from most landowners as the main concern was ensuring innovation and a focus on quality as the main drivers of providing that there was customer satisfaction (Furgiule, 2015).
The second strength is that the company is that it is able to create a structure that is of high quality at the same time incorporating designs that are innovative. The strength can be attributed to the high number of customers that have been attracted to the services. The ultimate strength of the company is that it has been able to receive different awards’ such as Project of the Year Award for private services. Having constructed separate residences, the company has gained more trust as the awards have created confidence to the company and help them focus on more awards at the same time more clients will be willing to entrust the company with the services as they find it accredited.
The main weakness of the company is the cost of building the residence. In the construction, Domus Corporation incurs high prices in the construction which reduces the profits that are generated by the company. High construction costs mean that the company will be required to charge the customers more so as to have a better margin. With every main entity focus being to have a considerable margin to help in the expansion, the focus on the growth is minimized when the margin is not enough to establish more projects for development. Another weakness of the company is the fact that few individuals can afford the residences that have been built by Domus. The company charges a considerable higher amount compared to other companies to meet the high costs incurred in ensuring high quality, the high costs charged to customers has the risk of compromising the excellent reputation that has been created and may reduce the market share in the near future.Analyze the company’s potential customers and the demand for North Point in the current market
The local citizens of London mainly receive an income which is above average as well as the potential customers in North Point. According to Mescia, the main focus of the company is to attract older couples and local citizens who were empty-nesters in the development (Furguile, 2015). The construction of residential houses was expected to grow over time, the Canadian Mortgage and Housing Corporation (CMHC) had a projection that the year 2014 will have new starts of construction amounting to 2,125 which is an increment of around 1% of the construction and developments that have been made in London (Furgiuele, 2015)
What are the pros and cons of developing North Point Versus selling the land? What implications can be drawn from the Analysis?
There are different factors to consider on whether to develop North Point or having the option of having to sell the land as both have cons and pros. Selling off the land sounds like a better option, but it has several pros and cons that come with the development. Getting to sell the property will build on the reputation of the company as will make it one of the companies that are able to undertake both. The company will have a better reputation and more exposure to the adoption of the strategy as well as help in a faster expansion of the company. The main con will be market challenges. The market of residential house construction has been changing over time and hence the process of building and at the same time selling land will hold the company is a high-risk position that may affect the return in the long term.
In a situation where the market can improve over time, the entity will get to benefit in the long period, the level of risk will be reduced. The reason for enhanced benefit over time is that there will be an avoidance of having a considerable amount of funds being channelled to the financing of loans while other funds being used in the construction of North Point. Another main con that will be experienced by selling the land is that the construction company will lack a going concern. Domus Development will not be in a position to attract new customers when they sell the property as no investment will take place. Similarly, there will be no future expansion of the company due to the limitation of space which is the critical determiner of construction and exposure that the company requires.
Prepare a 24-month cash budget for building North Point, Starting in May 2014 (Attached)
As Mercia, what is your decision? Be prepared to defend this decision
As, Mercia, the best option with regard to option to undertake is to build North Point. The choice of the building will create better opportunities for Domus development in the long term. One of the main advantages of the building is that it will assist Domus Development to innovate and develop designs that will be in a position to meet the market demand that is needed. Stronger relationship will be created with different clients on the adoption of the building, which key to ensuring there is success in the long term. Third parties such as potential stakeholder, the government and financial institution will be more willing to establish a relationship with Domus Development when a building is taking place as compared to selling as it has a focus on mass developments. A good reputation of the company will be withheld in the long term that is needed in expansion.
Furgiuele, E. (2015). DOMUS DEVELOPMENTS: TO BUILD OR NOT TO BUILD? Richard Ivey School of Business Foundation. Retrieved from Ivey: https://hbsp.harvard.edu/download?url=%2Fcourses%2F598971%2Fitems%2FW15174- PDF-ENG%2Fcontent&metadata=e30%3D
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