1
STRATEGIC PLANNING AND BUSINESS POLICY
A STUDY OF BAHRIA TOWN
USMAN NASIR
SALEH FAISAL
HAMAD KHALID
INSTRUCTOR: SIR ASIF AYUB KIYANI 2
Contents VISION STATEMENT...... 3
MISSION STATEMENT...... 3
HISTORY AND OVERVIEW OF BAHRIA TOWN...... 4
Economic Development...... 4
Infrastructure Development...... 4
Welfare Projects...... 5
PRODUCTS...... 5
Bahria Town Lahore:...... 6
Bahria Town Education...... 6
Bahria Town Health Care...... 6
Bahria Town Trust...... 6
ORGANIZATION CHART...... 7
EXTERNAL AND INTERNAL AUDIT...... 8
THE INPUT STAGE...... 11
EFE (EXTERNAL FACTOR EVALUATION MATRIX)...... 11
ANALYSIS OF EFE MATRIX...... 13
ANALYSIS OF IFE MATRIX...... 16
CPM (COMPETITIVE PROFILE MATRIX)...... 18
ANALYSIS OF CPM MATRIX:...... 18
COST LEADERSHIP STRATEGY...... 18
DIFFERENTIATION STRATEGY...... 20
FOCUS STRATEGY...... 20
MATCHING STAGE...... 21
SWOT MATRIX...... 22
BOSTON CONSULTING GROUP (BCG) MATRIX...... 23 3
THE GRAND STRATEGY MATRIX...... 25
QSPM MATRIX (QUANTITATIVE STRATEGIC PROFILE MATRIX)...... 32
CHARACTERISTICS OF AN EFFECTIVE EVALUATION SYSTEM...... 41
CONCLUSION...... 43 4
VISION STATEMENT The vision of Bahria Town is to be the largest real estate developer in Pakistan with its prime focus on the middle class customers. To build the future, we need ideas, the free flow of those ideas, and the effective use of human power and technology to shape those ideas into life changing ground realities. Bahria Town wants to capitalize on the countless opportunities being provided by globalization and to use advancement in technology to build innovative structures.
MISSION STATEMENT Bahria Town aspires to be Pakistan’s greatest builder of all times, with projects offered to an eclectic mix of segments , at choice locations with world class amenities, while ensuring the highest international standards, timely delivery, and lifelong customer satisfaction. 5
HISTORY AND OVERVIEW OF BAHRIA TOWN Bahria Town is one of the largest real-estate developers in Asia. Bahria Town has projects in Lahore, Rawalpindi, and Islamabad and is planning to develop projects in Murree and Karachi. The principal sponsor of the Bahria Town initiative is Malik Riaz Hussain.
Bahria Town has been shaping landscapes and lives in Pakistan since the company's inception in 1996. Not just building homes, Bahria Town has developed value-added, master-planned communities housing thousands of families enjoying a complete living experience. When complete, projects such as the JV D&B Valley, Golf City, Garden City, Bahria Icon and many more under development will accommodate more than a million residents and will cover over 1 billion sq ft. Bahria Town’s 21,000 employees are delivering USD 5 billion of iconic developments, driving leadership, pioneering innovation and creating a legacy for generations to come. Bahria Town is the prime mover of the Pakistan's real estate and construction sector. Economic Development
· Created direct employment for 21,000 people and 100,000 families. · Providing economic sustenance for over 1 Million families through supply chain and associated employment. · Driving and injecting foreign investment during these difficult times and building 2 Sheraton Hotels with investment of more than USD200 million. · Generated demand for 55 factories from cement, paint, bricks, glass and tiles to aluminum. · Bahria Town has paid direct and indirect taxes worth billions of rupees to the government. Infrastructure Development
· Delivered and developed Asia’s largest private housing scheme. · Development projects of billions of rupees which have introduced a new lifestyle to the nation. Bahria · Town maintains its indigenous project development department with equipment worth more than Rs 6.5 billion. · Delivered communities the size of cities with complete infrastructure including grid stations, hospitals, schools, recreational facilities, security,civic amenities, utilities, emergency services and futuristic lifestyle in a gated community. · Committed to bridge the annual deficit of 700,000 houses by providing housing solutions starting from Rs. 3.5 Lakhs, catering to all socio-economic classes. 6
Welfare Projects
· Providing daily free meals, twice a day, to more than 35,000 people throughout Pakistan under Bahria Town Dastarkhawan. · Thousands benefit from free medical treatment ranging from dialysis to open heart surgery, bone marrow transplant to general treatments in 3 large Bahria Town Trust hospitals. · Mobile dispensaries providing free medicines in rural areas. · Regular financial support to Al-Shifa Trust,Shaukat Khanum Memorial Trust, Sahara Trust, SOS Village and many more welfare organizations. · Running centers for over 4,000 orphans with educational and lodging facilities. · Delivered thousands of Pakistan’s first low cost 5 marla houses of Rs 3.5 and 5 Lakhs only. · Conducted combined marriages of more than 4,500 couples. · Providing micro-finance loans to students in Rawalpindi Agricultural University. · Running various schools, institutes and colleges in different cities and villages with more than 7,000 students. · Always at the forefront in helping the nation in times of natural calamities & unfortunate incidents such as the 2005 devastating earthquake, Margalla Tower & fire at the Marriott Hotel and Ghakhar Plaza Rawalpindi. Also led many relief teams for the aid of IDP’s, which provided financial, medical & food assistance. Medical Camp established at Swabi has served over 30,000 patients already.
Bahria town offers its products and services throughout Pakistan in cities including Rawalpindi and Lahore.
PRODUCTS Bahria Town Rawalpindi:
Safari Villas Meadows Bahria/ Safari Homes Awami Villas Bahria Heights Executive Lodges Overseas Enclave Safari Apartments Safari Valley 7
Bahria Town Lahore:
Awami Villas Bahria Orchard Umer Usman & Ali Blocks Safari Villas Overseas Enclave Executive Lodges Canal View Residency Park Lane Tower
SERVICES
Bahria Town Education Bahria Town Health Care Bahria Town Trust 8
ORGANIZATION CHART
CHAIRMAN
MANAGING DIRECTOR
TECHNICIAL ADMIN DIRECTOR DIRECTOR
TECHNICIAL MECHINICAL PROJECT BUSINESS ADMIN HRM PROCU ACCOUNT DEPT DEPT MGT. DEVELOPMENT DEPT DEPT REMEN DEPT DEPT DEPT T STAFF SALE MGMT PROCUR HO S GENERAL QC INSPECTIO GROUTIN EMENT ACC AND SECTION SECTION N SECTION G UNIT SECTION OU MAR NT KETI NG SECTI QS SECTION REPAIR LOGISTIC GRO BORE PILING CUST STORE AND UNIT SECTION STAFF UTI OME SECTION MAINTAIN DEV NG R ANCE SEC ACC RELA SECTION OU TION SHSE DESIGN BOR AND E DRAWING R&D PILI SECTION SECTI NG ON UNI T 9
EXTERNAL AND INTERNAL AUDIT
Strengths:
1. Bahria Town maintains its indigenous project development department: All the construction projects are supervised by the project department, so therefore individual attention can be paid to every project undertaken by Bahria Town.
2. Bahria Town has over 20,000 dedicated workforce: Employees are an asset for any organization and Bahria Town maintains over 20,000 dedicated employees which instill customer confidence and satisfaction.
3. Bahria town has Training and development programs for all levels: To ensure professionalism and commitment Bahria Town conducts regular training seminars to keep its employees up to date with new market developments.
4. Reward control mechanisms are effective: Employees are rewarded for taking initiative and showing excellent performance. Performance in linked to pay to generate healthy competition.
5. Bahria Town is supported by a full team of qualified architects and engineers: To maintain its construction quality Bahria Town is home to most qualified technical staff.
6. Bahria Town operates Pakistan’s largest private sector fleet of heavy earth moving equipment: To support growing housing needs in Pakistan Bahria Town has its own equipment thus ensuring that there are no delays in developmental projects.
Weaknesses: 10
1. Bahria town is an ongoing venture, it is expanding rapidly: As Bahria Town is expanding to various cities in Pakistan it is having difficulty in managing such wide scope of operations.
2. Less focus on R&D leads to stagnant environment: Currently Bahria Town is not focusing on R&D activities due to which the company is finding it difficult to grow.
3. Lack of co-ordination between different departments regarding sales and purchase: due to beauratic inertia the sales and purchasing department is not performing effectively and there is a delay in various administrative procedures.
4. Less advertising on electronic media as compared to print media: Currently Bahria Town is advertising on billboards throughout the city and is not focusing on print and electronic media.
Opportunities:
1. The construction sector in Pakistan has the potential to export services worth US$ 1 billion per year: Due to its construction of international standard Bahria Town has the opportunity to expand o overseas markets like Dubai and UAE.
2. In Pakistan there is shortage of over 800,000 housing units: Recent increase in population has created dearth of housing facilities and Bahria Town can capitalize on this opportunity.
3. Due to rapid urbanization more and more population is migrating to urban centers: As more and more population migrates to urban centers more housing facilities are required and Bahria Town has an excellent opportunity to capture the market.
4. As a consequence of social change joint family system is on the decline: In Pakistan more and more married couples prefer to live separately and therefore require cheaper housing facilities.
Threats: 11
1. Due to rise in inflation in Pakistan the cost of construction material has skyrocketed: The cost of construction material is relatively high and therefore is a threat for construction industry.
2. Cost of transportation and cost of labor has increased: Due to increase in fuel prices the cost of transportation of raw material and labor has increased.
3. Increasing percentage of tax payment on property by the government: Government has increased tax on property and this is causing a decline in the construction sector.
4. The current political instability and security situation in Pakistan has prompted the investors to seek business in other countries: Due to security situation in the country the investors are hesitant to invest. This is posing a real threat for the construction industry.
5. Several upcoming housing schemes like Jinnah Garden and Divine Gardens has increased competition: As new construction schemes are emerging there is an increased competition for capturing the market and this factor therefore poses the biggest threat for Bahria Town.
THE INPUT STAGE 12
EFE MATRIX CPM MATRIX IFE MATRIX
EFE (EXTERNAL FACTOR EVALUATION MATRIX) KEY EXTERNAL WEIGHT RATING WEIGHTED FACTORS SCORE OPPORTUNITIES 1. Construction 0.09 4 0.36 industry has potential to export services worth US$ 1 Billion to Middle East markets 2. Shortage and 0.08 4 0.32 demand for nearly 800,000 housing units 3. Increasing trend 0.06 3 0.18 of migration to urban centers 4. Increasing 0.06 2 0.12 13
population 5. Joint family 0.03 2 0.06 system on the decline 6. Partnership with 0.03 4 0.12 other construction groups 7. Real Estate 0.12 4 0.48 sector has registered over 88% growth since 2000.
THREATS 8. Increasing cost 0.12 4 0.48 of construction material 9. Increasing cost 0.12 2 0.24 of transportation and labor 10. Increasing 0.07 2 0.14 percentage of tax on property 11. Instability in the 0.10 4 0.4 country 12. Widespread 0.10 4 0.2 corruption in society 13. Upcoming 0.02 4 0.08 housing schemes TOTAL 1 3.18
ANALYSIS OF EFE MATRIX Bahria Town is actively pursuing investment projects in foreign markets like Dubai and UAE. To cater for shortage of housing in Pakistan Bahria Town is developing schemes like Awami Villas for lowe middle class clients. In addition Bahria Town is pursuing strategies with various construction groups like Harclow and HRL to provide low cost housing to its clients. 14
Bahria Town has established a relationship of trust with its clients and for this purpose it has established a customer support and service department. Its specific task is to prevent bureaucratic inertia and deal with all clients fairly without any financial mishandling. Thus Bahria Town differs from several other governmental departments with regard to client satisfaction. Several competitors of Bahria Town have emerged recently but none pose a serious threat so far due to the reliability of Bahria Town.
The cost of construction material such as cement has increased 10kg to 15kg per bag and to cope with this threat Bahria Town is offering European style compact housing.
Increasing labor and transportation costs are post a threat to the business in the current prevailing environment but overall the EFE matrix score of 3.18 indicates that Bahria Town is taking advantage of its external opportunities and avoiding threats facing the firm.
IFE (INTERNAL FACTOR EVALUATION MATRIX)
KEY INTERNAL WEIGHT RATING WEIGHTED FACTORS SCORE STRENGHTS 1. Over 20,000 0.07 3 0.21 dedicated 15
workforce 2. Bahria Town 0.10 4 0.4 offers more than 200 designs of housing and floor plans 3. Fully 0.08 4 0.32 integrated Enterprise Resource Planning and Management system 4. Bahria Town is 0.15 3 0.45 supported by team of qualified engineers and architects 5. Bahria Town 0.15 4 0.6 maintains project development department with equipment worth more than Rs 6.5 billion WEAKNESSES 1. Bahria Town is 0.15 1 0.15 expanding rapidly and therefore difficult to manage and control 2. Less focus on 0.10 2 0.2 R&D leads to stagnant environment 3. Lack of co- 0.02 2 0.04 ordination between different departments 16
regarding sales and purchase 4. Information 0.03 1 0.03 regarding housing interior and exterior not updated regularly 5. Less 0.15 1 0.15 advertising on print and electronic media 6. TOTAL 1 2.55
ANALYSIS OF IFE MATRIX Bahria Town has a committed workforce to support its various projects and this is a strength of the company as motivated workforce enables the company to achieve financial growth. Innovation is important to any business that is why Bahria Town offers various interior and exterior designs for construction to its clients which is a unique concept in Pakistan and represent a major strength for the company. 17
Bahria Town supports a fully integrated Resource Management system. It has a database of all the critical strategic information which is updated regularly and provided to the concerned departments for implementation.
Bahria Town is supported by qualified engineers and architects. These professionals are hired from abroad to keep the quality of construction up to the required standard. Bahria Town has its own project development department whose sole purpose is to consider the financial viability of any upcoming project as well as accessing the various changes that are needed to be made to the existing projects, therefore this is a major strength.
Due to several upcoming projects and rapid expansion Bahria Town faces some managerial hurdles due to which several other problems are arise. This is a major weakness. Bahria Town needs to focus itself more towards the R&D and at this point in time much of the focus is on capturing the huge domestic and foreign markets. This represents a minor weakness. Bahria Town needs to increase co-ordination between different departments regarding sales and purchase. This factor represents a minor weakness.
Bahria Town is currently not updating the information regarding different housing designs. This represents a major weakness. It needs more focus on R&D.
Recently Bahria Town has started advertisement on billboards across many cities and has shown paid documentaries on the television but this aspect needs more attention therefore this factor represents a major weakness.
An overall score of 2.55 suggests that Bahria Town needs improvement in several functional areas like advertising and R&D and overall co-ordination between different departments. 18
CPM (COMPETITIVE PROFILE MATRIX)
AUTHORITY BAHRIA TOWN DEFENCE HOUSING EMAAR 19
CRITICAL SUCCESS WEIGHT RATING SCORE RATING SCORE RATING SCORE FACTORS 1. Advertising 0.20 1 0.20 3 0.6 3 0.6 2. Product quality 0.12 4 0.48 4 0.48 4 0.48 3. Management 0.08 3 0.24 1 0.08 3 0.24 4. Financial 0.12 4 0.48 3 0.36 4 0.48 position 5. Customer 0.20 4 0.8 4 0.8 3 0.6 loyalty 6. Global 0.17 4 0.68 2 0.34 4 0.68 expansion 7. Market share 0.05 3 0.15 3 0.15 2 0.1 8. Price 0.06 3 0.18 1 0.06 2 0.12 competitiveness 9. TOTAL 1 3.21 2.87 3.3
ANALYSIS OF CPM MATRIX: The analysis of CPM matrix shows that Emaar is performing slightly better than Bahria Town in various aspects of the business. The Defence Housing Authority performing as good as Bahria Town.
STRATEGIES
COST LEADERSHIP STRATEGY TYPE 1 (LOW COST STRATEGY)
To pursue type 1 low cost strategy Bahria Town has developed Awami Villas. This project focuses on low cost quality housing. Awami Villas caters exclusively to the demand of the lower income class and is aimed to lessen the housing crisis of the country. The housing units are based on pre-fabricated technology imported from Malaysia for building low cost houses in Pakistan.
Bahria Town also operates and owns fleet of earthmoving equipment and several workshops in order to reduce cost of hiring and repairing of machinery.
Bahria Town has achieved economies of scale through partnership with various other construction groups like Areaa, Halcrow and HRL. It has steadily increased its production capacity and is expanding to cities like Karachi and overseas. 20
Bahria Town also owns various factories which provide support to the projects by investing in industries for vertical integration. These include: Bahria Town Asphalt Plants Bahria Town Batching Factory Bahria Town Crusher Factory Bahria Town Hollow Blocks Factory Bahria Town Kerb Stone Factory Bahria Town Pipe Factory
TYPE 2 (BEST VALUE STRATEGY)
To pursue type 2 strategy Bahria Town has developed projects such as Executive Meadows, Overseas Inclave and Bahria Homes.
Executive Meadows are detached villas which provide high end luxurious living with all amenities of life. It is specifically designed for clients who want the best product money can buy.
Overseas Inclave is a project specifically designed for expatriates who wish to live in Pakistan while enjoying the same environment as of any developed country. The development works at the Overseas Enclave are proceeding with full swing. Massive resources are deployed at the site to complete this project by Habib Rafiq Limited.
Several upcoming projects are also underway to attract client who are not price sensitive. These include:
1. Bahria Golf City 2. Sheraton Golf & Country Club 3. Sheraton Hotel
DIFFERENTIATION STRATEGY Bahria Town is actively pursuing differentiation strategies. It is developing Bahria Golf city which is Golf course resort housing project over the lush green hills of Islamabad. It offers 18- hole golf course which it first of its kind in Pakistan. No other real estate company has an attractive and safe investment offer than this. 21
In addition Bahria Town has recently developed a housing scheme known as Bahria Homes. It has been developed in collaboration with Turkish Construction company Areaa. These homes have also been benefited from the advanced architectural designs and technologies catering to seismic safety requirements.
Bahria Town offers First Formula 1 racing track with full proof safety provided to Bahria Town residents. It has developed Gold Class cinema with reclining seats showing latest movies.
FOCUS STRATEGY
Bahria Town primarily caters to upper class and expatriates. Therefore its primary focus is to develop such schemes which provide the same environment and facilities as in any developed country. It had developed Executive Meadows and Overseas enclave for this specific purpose. Bahira Golf City is another upcoming project which caters to customers who are not price conscious. 22
MATCHING STAGE
SWOT SPACE BCG IE MATRIX GRAND STRATEGY MATRIX
SWOT MATRIX STRENGTH-OPPORTUNITY (SO) STRATEGIES:
1. Develop new housing schemes for middle-class segment of population (S1, S11, O2 and O5) (Product Development) 2. Start new projects overseas (S2,S10,O1) (Market Development) 23
3. Intensify marketing efforts to make public aware of state of the art technology used by Bahria Town (S9, O4) (Market Penetration) 4. Advertise the variety of housing designs offered by Bahria Town (S8, O2) (Market Penetration) 5. Constantly add new construction designs to attract the influx of people to urban centre (S8, O3) (Product Development)
WEAKNESS-OPPORTUNITY (WO) STRATEGIES:
1. Focus more on R&D activities (W2, O3) (Product Development) 2. Increase public awareness about modern technology being employed by Bahria Town to increase market share (W5, O4) (Market Penetration) 3. Focus marketing efforts on married couples through increasing advertising on electronic and print media (W5, O7) (Market Penetration) 4. Deploy more resources to R&D to focus on customer preferences to increase market share (W2, W3, O2) (Market Penetration)
STRENGTH-THREAT (ST) STRATEGIES:
1. Maintain and increase the level of professionalism in the organization and hire more technical staff (S3, S10, T6) (Market Penetration) 2. Increase marketing efforts to instill the confidence of investors (S3, S4, T5) (Market Penetration) 3. Open more workshops to lower the cost of repair of machinery (S11, T2) (Backward Integration)
WEAKNESS-THREAT (WT) STRATEGIES:
1. Re-structure the sales and purchase department to improve intra-departmental co- ordination to satisfy more customers to increase market share (W3, T6) (Product Development) 2. Hire more staff to focus on R&D (W3, T6) (Product Development) 3. Hire more managers to manage several up-coming projects (W1, T6) (Product Development) 24
BOSTON CONSULTING GROUP (BCG) MATRIX
Bahria Town is positioned in quadrant III (Cash Cow) of BCG matrix. Bahria Town has relatively high market share in real estate sector but due to rise in inflation and economic recession the boom in construction industry has disappeared. Currently Bahria Town has started several up-coming projects like Bahria Golf City and Bahria Garden City. Bahria Town is also pursuing related diversification and has constructed Sheraton Golf & Country Club and Sheraton Hotel. Bahria Town is also pursuing unrelated diversification by constructing ACE International Academy, Bahria University City and Bahria Town Hospital Lahore & Islamabad. The stream of cash flows is steady and due to increasing population the market share is ever increasing.
High Medium 25
II I Medium Stars Question Marks
BAHRIA TOWN
III IV Cash Cows Dogs Low
THE GRAND STRATEGY MATRIX
Bahria Town is positioned in quadrant IV of the grand strategy matrix. Bahria Town is pursuing related diversification and has constructed Sheraton Golf & Country Club and Sheraton Hotel. Bahria Town is also pursuing unrelated diversification by constructing ACE International Academy, Bahria University City and Bahria Town Hospital Lahore & Islamabad. In addition Bahria Town is also pursuing partnerships with other construction groups like Areaa 26
Construction, HRL and Wilson Associates to achieve economies of scale. Bahria Town is also aggressively pursuing new housing projects in Karachi. It has recently started several projects in UAE. Rapid Market Growth
Quadrant II Quadrant I
Weak Competitive Position Strong Competitive Position
Quadrant III BAHRIA TOWN
Quadrant IV
Related diversification Unrelated diversification Joint ventures
Slow Market Growth
SPACE MATRIX 27
FINANCIAL STRENGTH
1. The Current Ratio of Bahria Town for the year 2009-10 is 1.19 which indicates the company has good financial health and has the ability to meet its short term obligations.
Current assets 2438.65 1.19
Current liabilities 2047.24
(Figures in Rs crore)
Assigned rating to this factor: 4
2. The Debt to Asset ratio of Bahria Town is 0.593 which indicates that Bahria Town is strong financially and relies less on creditors for its ventures.
Total Debt 1297.84 0.593
Total Assets 2187.65
Assigned rating to this factor: 4
3. Bahria Town’s Net Reserves increased by Rs. 522 crore for the year 2009-10.
Assigned rating to this factor: 4
TOTAL: 12
INDUSTRY STRENGTH 28
1. Economic recession has slowed down the growth in real-estate sector.
Assigned rating to this factor: 3
2. The government has increased tax on property.
Assigned rating to this factor: 2
3. Price of construction raw material has increased due to inflation.
Assigned rating to this factor: 4
TOTAL: 3
ENVIRONMENTAL STRENGTH
1. Political instability has diminished foreign investment in the country.
Assigned rating to this factor: -6
2. Inflation rate in Pakistan has reached a recent high point of 15.7%.
Assigned rating to this factor: -5
3. High risk involved in construction industry due to slow growth rate.
Assigned rating to this factor: -4
TOTAL: -15 29
COMPETITIVE STRENGTH
1. Bahria Town has largest workforce of over 20,000 employees.
Assigned rating to this factor: -1
2. Bahria Town has largest fleet of earth moving equipment in Pakistan.
Assigned rating to this factor: -1
3. Bahria Town has fully integrated Enterprise Resource Planning and Management system.
Assigned rating to this factor: -1
TOTAL: -3
CONCLUSION
FS AVERAGE: +12÷3 4
IS AVERAGE: 9÷3 3
ES AVERAGE: -15÷3 -5
CA AVERAGE: -3÷3 -1
-1+ (3) 2 (x-axis)
-5+4 -1 (y-axis) 30 31
THE DECISION STAGE
QSPM MATRIX 32
QSPM MATRIX (QUANTITATIVE STRATEGIC PROFILE MATRIX)
START NEW FOCUS ON EXISTING PROJECTS IN MARKETS IN ISLAMABAD KARACHI AND LAHORE STRATEGY 1 STRATEGY 2 KEY WEIGHT AS AS FACTORS TAS TAS OPPORTUNI TIES
Construction 0.09 ------industry has potential to export services worth US$ 1 33
Billion to Middle East markets Shortage and 0.08 4 0.32 1 0.08 demand for nearly 800,000 housing units Increasing 0.06 4 0.24 1 0.06 trend of migration to urban centers Increasing 0.06 4 0.24 1 0.06 population Joint family 0.03 3 0.09 2 0.06 system on the decline Partnership 0.03 4 0.12 1 0.03 with other construction groups
THREATS Increasing cost 0.12 1 0.12 4 0.48 of construction material Increasing cost 0.12 1 0.12 4 0.48 of transportation and labor Increasing 0.07 2 0.14 1 0.07 percentage of tax on property Instability in 0.10 1 0.10 1 0.10 the country Upcoming 0.10 4 0.4 1 0.10 housing schemes TOTAL 1 STRENGHTS Over 20,000 0.07 4 0.28 3 0.21 dedicated workforce Bahria Town 0.10 4 0.4 3 0.3 offers more than 200 designs of 34 housing and floor plans Fully 0.08 4 0.32 3 0.24 integrated Enterprise Resource Planning and Management system Bahria Town is 0.15 4 0.6 3 0.45 supported by team of qualified engineers and architects Bahria Town 0.15 4 0.6 3 0.45 maintains project development department with equipment worth more than Rs 6.5 billion WEAKNESSE S Bahria Town is 0.15 1 0.15 4 0.6 expanding rapidly and therefore difficult to manage and control Less focus on 0.10 2 0.2 3 0.3 R&D leads to stagnant environment Lack of co- 0.02 2 0.04 4 0.08 ordination between different departments regarding sales and purchase Information 0.03 ------regarding 35 housing interior and exterior not updated regularly Less 0.15 1 0.15 2 0.3 advertising on print and electronic media TOTAL 1 4.63 4.45
ANALYSIS
The QSPM matrix concludes that Bahria Town should start new projects in Karachi as it is the largest city of Pakistan and also the hub of financial activities. More and more population is migrating to Karachi to find employment opportunities. The markets in Islamabad and Lahore are saturated and too many housing projects have already been started in the area so Bahria Town should pursue to expand its operations.
STRATEGY IMPLEMENTATION
LONG TERM STRATEGY
Expand to new geographical locations like Karachi through extensive market development and market penetration. Currently the company has extensive presence in Rawalpindi and Islamabad.
DIVISION 1 MECHINICAL DEPARTMENT:
Bahria Town needs to implement needs to hire more employees in order to streamline its repair and department section. Bahria Town also needs to hire more technical staff in order to effectively monitor and inspect the construction of new houses.
DIVISION 2 BUSINESS DEVELOPMENT DEPARTMENT: 36
The sales and marketing section needs to increase its marketing effort and advertise more on electronic media. It needs more resource allocation towards this department. The marketing efforts are currently being focused on advertisement on billboards and print media.
The R&D section of Bahria Town needs to develop and implement standardized international infrastructure standards more rapidly due to rapidly changing technological requirements.
DIVISION 3 STAFF MANAGEMENT SECTION:
The Human Resource department needs to increase the frequency of training seminars and all employees should at least attend one training seminar per year.
POLICY IMPLEMENTATION:
Bahria Town needs to pursue the following policies to support its long term objectives:
1. Recruit more technical and management staff to fill in rapidly increasing vacancies. 2. Centralize some of the core activities of the business in order to ensure that they are functioning effectively at the start as Bahria Town is expanding to new geographical locations. 3. Increase the number of heavy earth moving equipment in order to cater for increasing housing demand. 4. Stress upon quality control processes to improve and maintain its construction quality. 5. Link performance with pay to increase employee morale and productivity.
RESOURCE ALLOCATION:
As Bahria Town is expanding to new geographical location it needs to establish new SBU’S. resources should be allocated towards purchasing land. Human resources should also be allocated towards recruiting and selection of new workforce. Analysis of market conditions should be undertaken to ensure that only competent workforce is hired.
MATCHING STRUCTURE WITH STRATEGY:
Bahria Town is expanding rapidly and in order to expand to new geographical location Bahria Town needs to incorporate some changes in its organizational structure. It needs to establish a separate requirement and selection centre in order to recruit workforce on a massive level. The 37
mechanical department need to create a separate section for procurement of new machinery on order.
A separate office of regional financial officer and regional marketing officer needs to be set up in order to handle the financial and marketing endeavors in these specific areas.
RE-ENGINEERING:
Bahria Town needs to reduce costs of its housing facilities in order to cater for middle class population. Bahria Town is the first Company in Pakistan to introduce low cost housing project “Awami Villas” deploying the steel patent pre-fabricated modular structure technology. It has greatly increased the market share of Bahria Town. It is also the only housing society in Pakistan with standardized international infrastructure standards.
MARKETING ISSUES:
Bahria Town needs to have more focus on electronic media advertising. In order to compete with the upcoming and existing competition Bahria Town needs to pursue the following policies:
1. Advertize more on television. 2. Televise exclusive documentaries on leading news channels. 3. Improve the website and make it more user friendly.
MARKET SEGMENTATION:
Although Bahria Town at this moment is the market leader in real estate sector so it needs not to pursue this strategy. However, the competitors are focusing on middle class population by offering them cheaper housing facilities. Bahria Town also needs to divert its focus on this segment of the market. Bahria Town has developed Awami Villas project to cater for the middle class customers. Currently Bahria Town is focusing on capturing the vast population segments in 38
Karachi. Its main focus would be on more affluent areas of Karachi while keeping focus on middle class customers.
PRODUCT POSITIONING:
Due to the recent recession the customers want economic living while enjoying the same amenities of life as any high class living area. So in order to fulfill this demand Bahria Town has started the project Safari Villas to cater for middle class consumers. It is an enclosed community with all the necessities of life. Bahria Town is also focusing on customers on the high end of the market. It has started the project of the Meadows to fulfill this exclusive purpose. Several upcoming projects are also in the pipe line which include:
1. Bahria Golf City 2. Sheraton Golf & Country Club
RESEARCH AND DEVELOPMENT ISSUES
Bahria Town is pursuing the second approach to R&D which is innovator imitator. Bahria Town has its own research and development section. Some of the recent developments on this front are:
1. Showcase of innovative design, incorporating cutting-edge sustainable concepts into elegant contemporary design. 2. The only housing society in Pakistan with standardized international infrastructure standards.
3. The first Company in Pakistan to introduce low cost housing project “Awami Villas” deploying the steel patent pre-fabricated modular structure technology.
MANAGEMENT INFORMATION SYSTEM ISSUES:
Bahria Town is the first Real Estate Development and Marketing Company in Pakistan to have a fully integrated Enterprise Resource Planning and Management System seamlessly integrating various intra-company processes for the ultimate benefit to the customer and maximum returns to the Company. 39
STRATEGIC PLANNING AT BAHRIA TOWN
At Bahria Town all the strategic planning revolves around the strategic department and its strategists. As a construction company Bahria Town needs to make a lot of strategic decisions regarding which market to penetrate and what type of housing facilities to offer their clients based on their financial needs. Due to recent economic recession the construction industry is experiencing a slow growth rate and there are a number of problems faced by Bahria Town which require strategic planning. These include:
Difficulty in finding skilled workers Difficulty in finding and keeping qualified managers Difficulty in finding and keeping qualified subcontractors Declining profit margins Increased competition Health care, liability, and workers’ compensation insurance costs
In order to cope with these problems Bahria Town needs to implement the following possible strategies which include:
Subcontractors need increased fees. Design professional need increased fees. Workers (internal clients) need substantial wage increases. The project cost to the owner must be lowered.
Bahria Town has gained strategic advantage over its competitors as it is sensitive to the needs of its customers. Low cost housing is being provided by Bahria Town. The Design Wing of Bahria Town works in co-ordination with the strategic department to provide the customers with variety of choices for design of their homes.
To gain competitive advantage Bahria Town has pursued the following strategies:
Understanding that true value is what clients are willing to pay for. Identifying your client’s highest needs and deliver on them. 40
Providing innovative solutions to clients’ problems. Defining value and service from the client’s perspective.
ADAPTING TO CHANGE
The strategic management process is based on the belief that organization should continuously monitor internal and external factors so that timely change can be made as needed. To survive, all organization must be capable of astutely identifying and adapting to change. The strategic management process aimed at allowing organization to effectively adapt to change over the long run.
EVALUATION OF STRATEGIES
The final stage in strategic management is strategy evaluation and control. All strategies are subject to future modification because internal and external factors are constantly changing. In the strategy evaluation and control process managers determine whether the chosen strategy is achieving the organization's objectives. The fundamental strategy evaluation and control activities are: reviewing internal and external factors that are the bases for current strategies, measuring performance, and taking corrective actions.
Strategic management is a broader term that includes not only the stages already identified but also the earlier steps of determining the mission and objectives of an organization within the context of its external environment. The basic steps of the strategic management can be examined through the use of strategic management model.
The strategic management model identifies concepts of strategy and the elements necessary for development of a strategy enabling the organization to satisfy its mission. Historically, a number of frameworks and models have been advanced which propose different normative approaches to strategy determination. However, a review of the major strategic management models indicates that they all include the following elements:
Performing an environmental analysis.
Establishing organizational direction.
Formulating organizational strategy.
Implementing organizational strategy.
Evaluating and controlling strategy. 41
Strategic management is a continuous and dynamic process. Therefore, it should be understood that each element interacts with the other elements and that this interaction often happens simultaneously.
DIFFICULTIES IN STRATEGY EVALUATION 1. Increase in environment’s complexity
2. Difficulty predicting future with accuracy
3. Increasing number of variables
4. Rate of obsolescence of plans
5. Domestic and global events
6. Decreasing time span for planning certainty
Strategy Evaluation Should:
• Initiate managerial questioning of evaluation and assumptions
• Trigger review of objectives & values
• Stimulate creativity in generating alternatives
Managers and employees of the firm should continually be aware of progress being made toward achieving the firm’s objectives. As critical success factors change, organizational members should be involved in determining appropriate corrective actions.
CHARACTERISTICS OF AN EFFECTIVE EVALUATION SYSTEM • Strategy-evaluation activities must be economical; too much information can be just as bad as too little information. 42
• Strategy-evaluation activities should also be meaningful; they should specifically relate to a firm’s objectives.
• Strategy-evaluation activities should provide timely information; on occasion and in some areas, managers may need information daily.
• Strategy evaluation should be designed to provide a true picture of what is happening.
REMULT’S CRITERION
Consistency:
There must be a consistency between goals and objective of Bahria Town. As new housing schemes are emerging and as they try to capture the markets in Islamabad and Rawalpindi Bahria Town needs to make sure that all its departments are performing according to the planned goals and objectives.
Consonance:
Consonance basically identifies set of trends in the market based on the external environment. As population is increasing and due to rapid urbanization the housing needs of people are increasing day by day. Also due to inflation and rise in prices people require cheap housing and Bahria Town is responding to all these factors.
Feasibility:
The strategy implemented by the company must be within its available resources so that the resources are not over taxed. Currently Bahria Town needs to implement market development because it has the resources to expand to new location. It can easily establish the supporting infrastructure to accomplish this task.
Advantage:
Bahria Town has competitive advantage over its competitors because it has Pakistan’s largest private sector fleet of heavy earth moving equipment and the service workshops. It is also offering housing schemes for people belonging to varying economic classes. The technology employed by Bahria Town is latest and to some extent cheap so it has gained edge over its competitors. 43
CONCLUSION After conducting the internal and external assessment and making different matrixes we can safely conclude that Bahria Town is the market leader in the construction industry in Pakistan. It has set the benchmark for others to follow. It has employed latest technology in construction of houses for the first time in Pakistan, and in addition Bahria Town introduced the concept of European Style living in Pakistan. Bahria Town caters to all segments of the society and therefore is very successful in capturing the real estate industry. When Bahria Town started in 1996 customers and the general public at large were skeptical about the reliability of its administration and financial transparency. But due to one success after the other the customer confidence in Bahria Town is ever high and more and more people are joining the Bahria Town family. 44
REFERENCES
1. http://www.bahriatown.com
2. www.wikipedia.com
3. http://www.kulzick.com/stu/rumelt.htm
4. http://money.cnn.com/real_estate/
5. http://www.msnbc.msn.com/id/8874568/
6. http://online.wsj.com/public/page/news-real-estate-homes.html 7. 45