Some of you will have read the article last week on business strategy for letting and estate agents in the Lettings Management Industry, which received a good response, so I am continuing in a similar theme this week. Obviously we discussed what strategies agencies can take to the market, but before you get anywhere close to deciding on your strategy towards achieving a competitive advantage, you have to first do some analysis. Analysing the situation you are in as an agency will involve:
- internal analysis (factors unique to the agency like routines, capabilities, strengths and weaknesses) and
- external analysis which is where I am going to start today.
So external analysis involves factors outside of the agency’s control and common tools business analysts use are; PEST analysis (political, economic , social and technology factors), Driving forces, Key success factors, Industry Life Cycle and Industry forces. One of the most prominent and more important tool is the PEST analysis, which many of you will be already familiar with. So here we go:
Political: This is where business activity in the industry is restricted due to either laws or interest groups. The first thing that comes to mind is the new property services regulatory authority. In a previous blog, we learned that several Irish agencies had to re-apply for their licences after failing to have the correct information prepared for the body. There is also new regulation set to be brought in next year on the monitoring of monies in client accounts.
Economic: These factors are mainly to do with the purchasing power and spending patterns in the market. The question a company usually asks themselves here is are people willing to spend on the services provided in the industry. In Ireland this, in my opinion, is a ‘no’ to the vast majority of landlords, tenants, home-sellers and any other customers of letting or estate agents. This is down to one simple factor of people not having as much money to spend anymore. The one area I might say the consumer is willing to spend on is the sale of a home, as it may be urgent or important to get the highest price obviously.
What every agency in the Lettings Management Industry wants, a bunch of happy tenants, landlords & homeowners.
Social : Social factors affecting the industry include the population trends, family size, diversity and education. So thanks to Indexmundi.com, I gathered some stats on some of the key trends I think are effecting the industry currently. Things are good and bad, our population is still rising and currently stands at 4.72 Million, up from 4.67 last year. Net Migration rate is down from 4.5 to 1.6 per thousand. This means there is less and less people coming to Ireland. And lastly the birth rate is 15.8/1000 which again is down from 16.5 in 2010. In my opinion, these stats are not good for the industry.
Technological : Technology is the final piece to this puzzle we have been trying to solve. Currently I would think technology is actually affecting areas of the property services industry such as management, sales and lettings, marketing and customer relations. As we become more and more fond of our devices and technologies, agencies must adapt to suit their market. This may involve having a digital strategy in marketing their services or a C.R.M system to manage their clients.
This analysis applies to the Lettings Management Industry specifically, but it can be applied to any business.
That’s it for this week’s business strategy blog. Thanks for reading!