Environmental Analysis for InspectPro Company Paper Example

Paper Type:  Essay
Pages:  7
Wordcount:  1854 Words
Date:  2022-09-18

Introduction

InspectPro is a limited liability company based in Littleton, Colorado. The company offers a wide range of inspection services. Operating since 1999, the company has offered residential and commercial building inspection services to over 22000 clients. Various macro-environmental factors affect inspection businesses in the US. These factors include current industry trends, legal and regulatory laws, and the political factors regarding both the residential and commercial real estate. The tremendous market success of InspectPro is as a result of various strategies put in place to take maximum advantage of opportunities and also shield the business from external threats. While the company has already established itself as a credible and trustable inspection company in Colorado, it is important to note that there are still significant external factors that the firm's management must address. These factors are critical to the future success of the company since they present both opportunities and threats. The environmental analysis of these factors show that InspectPro must continue reinventing itself, and if it effectively pays attention to these macro-environmental factors, the company will remain strong.

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Political factors are affecting InpectPro's business environment

a). Tax and economic policies

This is one of the most significant macro-environmental factors that has affected the operations of InspectPro for a long time. Several major and minor tax increments and decrements have been effective E both by the federal government and the state of Colorado in the past decade. The US government has been lenient to domestic businesses for a long time (Baradat & Phillips,2016). Government regulations have always favoured local companies such as InspectPro. Since president Donald Trump took power, he has pushed for the enactment of more lenient tax and economic policies to protect local businesses. This means that InspectPro should exploit the current tax environment in the US to make more profits than in the past few years. Colorado State is tax friendly (Davis et al.,2015). With the state tax rate at only 4.6% of the total income, it means that InspectPro's should take maximum advantage of the prevailing tax conditions. The company is also running under a very stable currency and some of the lowest interest rate conditions in the world. This can perhaps explain the tremendous success of the company over the past ten years.

b). Foreign Trade Regulations

InspectPro is mandated to operate mainly in Denver, Colorado. However, this does not mean the firm can expand to other states or countries. The company has expanded to several US state under the same name. An aggressive demand for commercial and residential house inspections in various states has attracted the company's attention. The company has therefore aggressively expanded ever since it was founded. One of the main hindrances to the company's ability to expand to some states, however, can be attributed to harsh tax policies on some states which give preference to similar companies based in those states. The company has also not been able to expand across the US borders to several trade restrictions. Some countries such as Mexico have put in place initiatives that do not favour foreign companies. These measures include very high taxation of foreign companies.

c). Political Stability

The absence of political stability directly impacts on a company's ability to operate. This holds especially for those businesses operating on a global scope. Inspection businesses of both the residential and commercial real estate greatly require peaceful environments to offer their services to clients successfully. Fortunately for InspectPro, Colorado is a politically stable state. Political instability often results in a drop in revenue due to the disruption of the business environment. The perpetual peace and stability especially in Denver, has seen the company successfully offer its services to thousands of clients means that the company has been thriving. The company has not expanded across the borders and therefore will continue to enjoy operating in a politically stable country.

d). Employment Laws

The state of Colorado has continued to come up with new labour laws aimed at safeguarding the interests of employees. The minimum wage is at $10.6.The rights of house inspection professionals employed by InspectPro are safeguarded under the employment laws of Colorado. InspectPro has not had any major issue meeting the employment laws stipulated by the constitution in Colorado. However, this does not mean that the firm should mistreat its workers as this might impact severely on its operations.

Industrial Trends Affecting the operation of InspectProMillennials buying homes and commercial, residential complexes

One of the most notable trends in the real estate and housing sector in for the past few years is the purchase of houses by wealthy investors and millennials. This has a direct bearing on the income of InspectPro in various ways. Normally, the firm makes money from being called upon to inspect houses abought to be bought mainly by the regular people. However, the aggressive entry of real estate investors and millennials buying commercial properties has been welcomed both with open arms and with closed arms by the company. One of the main reasons why millennials affect the revenue of the company is that once contracted; the company often gets lucrative deals that have seen its profits climb. However, one of the main reasons why the company has continued to lose grip of rich home buyers is that most of the times, they chose to contract the services of more established home inspection companies in the United States, most of whom are not located in Colorado.

Steady Stream of new construction

Colorado, the state where the company is based, has been experiencing a spike in the rate of construction in recent years. The rapid development of commercial, residential houses is mainly due to the active demand for rental houses, especially in Denver. The high rate of construction going on across Colorado has affected the company's revenue positively. New real estate houses for sale require the services of house inspectors, one of which is the InspectPro company. The company has exploited the high demand for house inspection services in Colorado by people seeking to buy newly built homes. This explains why the company has continued to thrive.

High prices of construction and building materials

The current prices to construction houses have continued to fluctuate, but on upwards trend. Construction is becoming very expensive throughout the US. This might be attributed to the rise in the price of building materials and expensive construction equipment. The high expenses of construction are likely to affect the company's earning in future. More expensive rates of construction as time goes by means that less and fewer houses are likely to be built in future. This will means fewer houses will be up for inspection, which is likely to affect the company's revenue negatively.

Rising home and commercial property prices

According to research, home and commercial property prices rise by about 5% every three years. This presents a grim future for InspectPro. The rising costs of purchasing residential properties means that lesser and lesser people would prefer to buy houses than in previous years. The decreasing number of people purchasing commercial and residential property means that there would be lesser and lesser houses house to inspect than previously. The population of Colorado is mainly made of the middle class. High home purchase rates and expensive commercial properties would therefore not encourage them to buy the houses.This means that the company would run short of clients.

Softening cap rates

The softening cap rates n the real estate sector can be attributed to factors such as high interests rates and fluctuating home prices Armstrong-(Taylor,2016). Another factor, which could impact on Colorado in future and lead to softening cap rates is high taxation on the purchase of residential prices. The softening cap rates have a direct bearing on the operation of InspectPro. As house tend to become cheaper at times, house owners might be reluctant to sell their properties for fear of going at a loss. This means that the inspection business would be placed at potential risk of having inadequate customers.

Technological Advancements

The advance in technology has affected almost all business in the world. While technology has made it easier for companies to operate efficiently, it has also resulted in unexpected situations. For inspection businesses, technological advances have resulted in both negative and positive impacts. One of the main impacts of technology on the operation if InspectPro is the invention of tools that have made the firm world more efficiently and accurately. This means that the firm has saved lots of money that would have been previously been wasted. The advance in technology has also resulted to some threats for the company. For example, certain highly advanced software are being used by home and commercial property buyers to access the quality of the houses. The use of software means that home owners will not require the services of inspection companies soon. This is a threat to the existence of InspectPro.

Increasing competition

One of the biggest threats to the existence of InspectPro is stiff competition. There are hundreds of established inspection companies not only in Colorado but throughout the US. These established companies have been competing heavily for the small market share. According to statistics, there are close to 50 inspection firms in Colorado alone. This presents a great challenge for InspectPro. Often, the existence of a large number of firms offering the same type of service means that the price of service would reduce. There has been a reduction in the cost of inspecting homes and commercial complexes chiefly because the market is saturated. The company, however, has been able to counter this competition by going an extra mile. One of the methods used to attract and retain clients is through affordable pricing and branding. The company has also been keen to develop and keep a good reputation. As a result, it has become a popular company not only in Colorado but also in the US.

Advertising Trends

One of the most revolutionary ways of selling products and services fast is through advertisements. Advertisements directly impact a company's revenue. All companies must adopt emerging advertising trends otherwise they will run a risk of being outcompeted by other similar firms. InspectpPro has engaged in the aggressive advertisement of its services both online and offline. The massive advertisements campaigns can be partly attributed the high number of potential house inspections companies. Modern means of advertisements such as using the internet normally reach a large number of people of a short period. All companies seeking to stay afloat must constantly keep advertising their services.

Social factors affecting inspection businesses

Social factors though normally not powerful especially when it comes to house inspection businesses have some bearing. House inspection businesses have been making some changes to appeal to the demands of the public. For example, the firm decided to expand throughout the US after it was founded in the 1990's to meet the growing public demand. Another factor was the reduction of initial house inspection prices, especially to appeal to the middle class.

Market forces

The threat of new entrants

When InpsectPro began operating in Colorado in 1999, there were very few inspection companies then. Today, there are over 40 home an...

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Environmental Analysis for InspectPro Company Paper Example. (2022, Sep 18). Retrieved from https://proessays.net/essays/environmental-analysis-for-inspectpro-company-paper-example

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