The emergence of the
Total Real Estate Solutions industry and how to play the associated games have
been analysed
previously. In the current analysis, the focus is on the forces that will
facilitate entry of established companies and emerging ones. From supply-side
to the demand-side, players have different elements that need special attention
for value creation, delivery and capturing.
Within the supply-side,
companies that offer large volumes of varied solutions will enjoy lower costs
per unit because it would be easy to spread fixed costs over more units, employ
more efficient technology or command better terms from suppliers or vendors.
From the demand-side,
buyers are most likely to have significant trust in established and larger
companies for a crucial solution. Buyers will also prefer patronising large companies
because of the network of fellow customers. According to our analysts, this is
due to the fact that buyers are most likely to purchase solutions based on
family members or colleagues’ patronage of the established brands.
To successfully create,
deliver and capture value in the industry, capital remains a key factor. The
industry is capital intensive, which will be a significant bottleneck for the
new entrants. They need to invest large financial resources in order to compete
with established companies. Huge capital is needed for fixed facilities purchase,
extend customer credit, build inventories and employ competent personnel.
Companies that have
been offering two or more solutions identified in the previous analysis will
have incumbency advantages because it would be easy to extrapolate competencies
and skills in the new space, the Total Real Estate Solutions than the new
entrants. Cost advantage, quality, established brand identities or cumulative experience
and preferential access to the best material resources or supplies are some of
the benefits that will accrue to established companies.
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