Management
Strategic Management Policies Project
Student Name
Institution Affiliation
Course
Date
Business Model
A business model is a high-level strategy for operating a profitable firm in a specified market. The value proposition is an important part of the business model. This is a description of a company's goods or services and why customers or clients find them appealing, ideally articulated in a way that distinguishes the product or service from its competitors (Massa, et al (2017).
A new business's business model should as well include expected beginning costs and finance sources, the company's target client base, marketing strategy, a competitive analysis, and revenue and expense estimates. The plan may also specify opportunities for the company to collaborate with other well-established businesses. A business model for an advertising company, for example, might identify benefits.
Successful organizations have business models that enable them to meet customer needs at a reasonable and long-term cost. Many businesses periodically change their business models to meet changing business circumstances and market demands.
The Business Model
Long-term viability
Building a simple yet radical idea to help people
Long-term viability
Sustainability is at the heart of the KB House business model.
Sustainability is not only the moral thing to do, but it is also good for business. Customers, our operations, the environment, and the employees and partners who make up KB Home all benefit from the company's dedication to sustainability. It also aids in the reduction of greenhouse gas (GHG) emissions and the use of natural resources (Paauwe, (2004).
Developing a simple but revolutionary approach to assist people.
Another business strategy is based on a simple yet revolutionary concept: a house becomes your home when it reflects who you are. That's why we give our customers a variety of alternatives - from homesite to elevation, floor plan to design options - as well as a tailored buying experience from start to finish. The firm has always achieved sustainability through:
a). Lowering Total Cost of Home-ownership
Energy- and water-efficient homes are more affordable to operate than typical new or resale homes, making sustainability a compelling competitive advantage.
b). Designing Homes That Are Healthier for Residents
The firm has always achieved sustainability through:
c). Lowering Total Cost of Home-ownership
Energy- and water-efficient homes are more affordable to operate than typical new or resale homes, making sustainability a compelling competitive advantage.
d). Designing Homes That Are Healthier for Residents
We can produce sustainable homes at a lower cost and with less environmental impact than most builders, while also reaching a wider range of buyer segments, thanks to our operational discipline, scalability, and waste reduction efforts
e). Improving the Supply Chain's Stability
Our projects are enriched by the sustainable practices of our partners. Certifications for product sourcing, waste-reduction practices, and recognition of our Ethics Policy are all required. We work hard to ensure that our suppliers share our commitment to improving sustainable standards.
f) Increasing the Supply of Affordably Priced Housing
First-time home-buyers make up the majority of our clientele. The homes we construct answer a critical demand in many of our communities for more housing that is accessible to people earning the median income.
g). Becoming the Partner's Builder of Choice
We think that our history of thriving, sustainable communities and industry leadership qualifies us as a preferred partner for municipalities, land sellers, developers, and other stakeholders.
h). Long-Term Value Preservation of the Environment and Natural Resources
Our size, leadership, and technical know-how all contribute to good environmental characteristics in all of our homes. As a business strategy for long-term value generation for our stakeholders, we focus GHG reduction through energy- and water-efficient products.
i) Increasing Comfort by Integrating Sustainability Technology
Many of the sustainable technology we include into our houses also provide our home-owners with increased comfort and personal efficiency, as well as cutting-edge and user-friendly smart home interfaces.
j)I Water conservation should be prioritized.
For homebuyers, local communities, and local governments, we are aggressively addressing this growing need. We install water-saving systems in our houses to assist our customers save money on their water bills while also helping to relieve stress on local communities.
k). Becoming a Favored Employer
Our vision is to become a top-tier employer in the homebuilding industry and beyond by cultivating a culture of excellence and a socially and economically sustainable and safe work environment that values inclusiveness, equity, and meaningful work.
Five elements of business model.
Even if you're not searching for investors, there are numerous advantages to developing a business plan. Setting up a business model, for example, can help you stay on track when starting or renovating a company. These aspects can assist you in succeeding because they promote business growth (Taran, (2016).
The most important part of your company strategy is the business model. It not only keeps you organized and motivated, but it's also required if you're seeking investors or loans. They do differ, and by selecting the appropriate model for your company, you may easily fill in the blanks when it comes to your particular industry.
The features of the company model listed below will assist you in considering several critical factors. Then, as you reflect on these things, you'll be able to see what you could have overlooked. Overall, it's a vital aspect of beginning your own company. If you're searching for investors or a bank loan, for example, putting together a business model will help you express clearly what your product or service is about and how it will flourish in the marketplace. If you're searching for investors or a bank loan, for example, creating a business model will allow you to properly describe what your product or service is about and how it will flourish (Linder & Cantrell, (2001)
1. Value Proposition.
Building a home necessitates solid bonds. Respect, honesty, and open and honest communication are required to develop a healthy connection. Our people are the heart and soul of KB, and our commitment to relationships guides how we interact with one another, how we serve our customers at every stage of the process, and how we collaborate with our suppliers, trade, and government partners. Our brand is built on the foundations of innovative design and high-quality building standards. A love for the well-being of individuals who live in our houses drives our constant desire to develop excellent homes. We care about making our buyers' lives more comfortable, easy, and healthy, from architecture to construction to customer service (Payne, et al (2017).
That's how we've risen to the top of the industry in terms of client happiness, and we intend to keep it that way. Every customer, we think, is entitled to a house that fulfills their dreams. That's why it's our joint job to make sure that everything we build is of high quality, so that every customer receives a home—and a home-buying experience—that meets their needs while staying within their budget. It's a methodical and prudent approach to home construction that benefits both our customers and our company.
Revenue model
Naturally, the booming housing market is a major role in KB Homes' performance. For years, American homebuilders have been under-building, with new starts plummeting a few years before the financial crisis and never fully recovering to the levels required to meet the country's rising population. This issue has risen to prominence in recent years as a result of historically low mortgage rates, which have resulted in a spike in home-buying activity. Not only did this encourage more young people to buy rather than rent, but it also encouraged existing home owners to sell and upgrade their homes. It also prompted a slew of real estate investors to buy homes for resale or rental purposes (Lehdonvirta, (2009). Even if mortgage rates rise again, property prices are unlikely to suffer due to a lack of supply. Buyers are having a particularly difficult time finding affordable single-family houses. Unless there was a serious lack of supplies and labor, it would be difficult for experienced home builders like KB Home to do badly in this market.
Market opportunity.
We considerably extended our production capacity over the last year as we scaled our business to meet the solid demand that is driving the housing market and connect our starts to net orders," said Chief Executive Jeffrey Mezger.
In 2021, the company faced "difficult" operational conditions, including "labor shortages and supply chain disruptions, as well as municipal and associated delays," according to the corporation. KB Home expects revenue of between $7.2 billion and $7.6 billion this year. That's a possible rise of roughly 30% over revenue in 2021 at the midpoint of the range. Revenue is expected to be $7.4 billion, according to analysts.
According to CNN, housing prices rose as much as 20% in 2021, according to the Federal Housing Finance Agency, as an anticipated 6 million properties were sold, a 15-year high. "Our approximately $5 billion backlog and predicted considerable year-over-year growth in community count support significant revenue growth this year," Mezger added.
In the third quarter, the firm delivered 28% more homes than it did the year before. Its gross profit margin on homes increased by 2.3 percentage points to 22.3 percent. According to KB, the improved profit margin was due to attractive pricing resulting from high demand (Stevens, (2006).
Competitive Environment
PulteGroup has created a living laboratory to investigate how people will live in the not-too-distant future. PulteGroup has introduced two model homes on "Innovation Way" within Babcock Ranch, America's first and largest solar-powered village, that are testing the newest breakthroughs in sustainable new home technologies and innovations, including consolidation with the new, all-electric F-150 Lightning. M.D.C. Holdings, Inc. primarily constructs and sells single-family detached homes that are designed and built to fulfill the needs of local residents. Under the moniker Richmond American Homes, the company also produces a variety of home types in each of its markets, primarily for first-time and first-time move-up homebuyers. Through Home-American Mortgage Corp., American Home Insurance Agency, Inc., and other companies, it also provides mortgage finance, insurance, and title services, particularly to Richmond American home-buyers (Hasan, (2013).
Competitive advantage
Mezger claims that KB has a "competitive advantage" in serving first-time purchasers and creating homes in desirable locations at reasonable prices.
KB Home has recently opened new neighborhoods in Santa Clara, Upland, and Stanton, California, as well as west and north-west Las Vegas and Tucson.
In mid-March, the firm announced that it had acquired more than 400 house sites in the Charlotte area as part of an expansion and that three new communities would open there early next year. Bill Kiselick, who has 35 years of experience in the home building industry, including 25 years in the Charlotte market, has been appointed to lead the company's Charlotte operations.
Vulnerabilities in the KB Business Model
Weaknesses
• Housing Market Saturation Competition from rival homebuilders with substantial inventories will put pressure on profit margins and demand for KB Homes Property in the home. The current foreclosed inventory contains 9-10 months' worth of home sales, and it's certain to get worse as residential mortgages that are past due or in foreclosure account for another 15 months' worth of home sales4.
• Nevada, California, Arizona, and Florida exposure KB Home has a lot of exposure in Nevada, California, Arizona, and Florida right now. Since the country's economic downturn, real estate in these three states has suffered the most. As a result, the short-term upside potential in these markets is quite limited, as conditions may worsen before improving as a result of the "shadow inventory" of pending foreclosures (Tevel, et al (2015).
• Consistent losses and a dwindling revenue stream Over the last few years, KB Home has had a much lower income stream, with rising losses (2009 Revenues: $1.84 Billion vs. 2007 Revenues: $6.4 Billion). As a result, KB Home has had to make a number of land and asset sales at a loss in order to stay afloat. Poor economic conditions may continue to decrease income streams and raise net losses, forcing KB Home to sell more assets in order to keep its balance sheet in good shape1. Three years in a row, KB Home's earnings per share have been negative.
• Obtaining credit is currently challenging for homebuyers. Despite the fact that mortgage rates are extremely low, many potential homeowners have difficulty obtaining credit at all, let alone at such a low rate. Low interest rates do not imply that credit is available to everyone. As a result, housing demand falls as many potential purchasers struggle to obtain financing.
Threats.
.Continued "shadow inventory" of delinquent mortgages and foreclosed properties
More mortgage defaults and foreclosures will continue to flood the housing market and keep housing inventories high. This will continue to weigh significantly on the housing market's recovery. According to S&P analysts, clearing the market of "shadow inventory" might take up to three years, posing a substantial threat to KB Home and other homebuilders16•
•A rise in the unemployment rate
Housing demand will stay low if unemployment in the United States continues to rise, owing to diminished consumer confidence, difficulty obtaining finance, and ongoing economic uncertainty.
• In the private investment sector, there is a lower demand for mortgages.
The Federal Reserve's $1.25 billion mortgage buyback scheme has artificially lowered rates. The Fed is set to end the program on March 31, 2010, and expects private investment to keep rates low. The home market will subsequently be further stimulated by the cheap rates. If private investment in the market declines as the Fed reduces its liquidity program, interest rates might swiftly climb, reducing demand for new homes.
• An inquiry by the Securities and Exchange Commission is underway.
On October 9, 2009, KB reported that the Securities and Exchange Commission (SEC) had launched an unnamed inquiry into the company. Though the cause is unknown, analysts believe it is due to a lack of openness in their inventory impairment analysis and accounting procedure17. This inquiry could frighten investors, damage the company's brand, and be financially ruinous. Furthermore, the SEC has charged Bruce Karatz, the former CEO, with backdating stock options. While he is still being investigated, reports suggest that he made $6.62 million more than he should have by picking the dates he was supposed to receive his stock option grants retroactively18. Despite the fact that Karatz is no longer the CEO, if he is found guilty, investors may suffer as a result of questions about the company's management and ethics.
Recommendations
Challenges
In the near future, KB Home will confront various obstacles. The most pressing issue is the state of the housing market and economy in the United States. Though a few housing market indicators have steadied and broader economic conditions have improved, the housing market will continue to be highly fragile for some time. In the housing market, foreclosed inventory currently accounts for 9-10 months of home sales, while residential mortgages that are past due or in default account for another 15 months of home sales, saturating the market further. This "shadow inventory" of bank-repossessed properties and distressed mortgages creates a great deal of uncertainty about how much inventory these homes will add to the market, as well as when they will clear the market and inventories will return to historical averages. In terms of economic conditions, unemployment and other forms of economic uncertainty continue to weigh on the economy, causing consumer confidence to suffer (Björkdahl & Holmén (2013).
Other difficulties are caused As rival homebuilders continue to refocus their operations towards first-time home buyers, which has long been KB Home's biggest line of business, competition in the homebuilding sector is increasing. Furthermore, KB Home's portfolio exposure in very weak areas of Nevada, Arizona, California, and Florida will exacerbate the firm's difficulties.
Short term recommendations
Financial cash and strength
In the medium term, KB Home will need to maintain financial soundness in order to satisfy near-term obligations while preserving its industry leadership position. The primary aim for KB Home is to keep cash on the balance sheet stable so that it may continue to pay down debt and preserve financial soundness. Given the market conditions, preserving large levels of cash on the balance sheet will be critical given negative earnings per share and a drastically reduced stream of sales over the last couple of years. This may necessitate the sale of land or assets, but given the uncertainty and high volatility of the housing market, it will be critical to remain well financed until housing and economic conditions improve.
Asset Sales in Distressed Markets & Opportunistic Market Purchases
KB Home now has a competitive advantage over its competitors in that it has 4.3 years of land supply compared to the industry average of 6.4 years. The "short land" position is advantageous to KB Home, since it allows for greater flexibility in future purchases and market liquidity. KB Home may make fresh land acquisitions at extremely low prices in various markets with a lot of discipline and research. Despite the fact that cash will be critical for KB Home, the company should consider selling assets in failing areas and reinvesting the proceeds in new chances in housing markets with greater recovery prospects. KB Home must continue to look for new regions of expansion that are both appealing and profitable, while also earning cash through land and asset sales in places with little upside potential. Given the market conditions, KB Home should keep lesser years of land supply than its competitors, but it should endeavor to find property with the best growth potential to fill the acquired land supply. KB Home will need to do so to maintain a strong position relative to its competitors as the economy improves, necessitating an increase in land supply positions.
Maintain a focus on first-time buyers and implement more affordable initiatives
KB Home has remained reasonably well-positioned throughout the housing crisis, because to its long-term business plan of focusing on first-time homebuyers. The first-time homeowner has gotten government assistance in the shape of a $8,000 tax credit as well as improved credit access. The quantity of homes supplied and the average price per house have both dropped dramatically in recent years, indicating market saturation and buyer power. Other competitors have been expanding into the first-time homebuyer area to take advantage of the benefits available to them, meaning a more competitive environment for KB Home and a greater need for distinctiveness. To remain competitive in the market, KB Home will need to expand its offering to first-time homebuyers. To undercut the competition and make the house even more affordable, the strategic advice is to keep the "Open Series" line of more customization and efficiency options, but establish communities with lower lot sizes and living areas. This would help KB Home diversify its portfolio in the first-time homebuyer market even further.
Long term recommendations
Increase portfolio diversification in the United States
KB Home is now active in twelve states across the United States. KB Home, on the other hand, only had a presence in eight states before to the start of the housing crisis, providing its business portfolio very little diversification. Only a few of these housing markets declining might eventually raise the unpredictability of KB Home's business operations. The implicit risk and exposure to any specific market that KB Home assumes will be significantly lower as a result of spreading into additional locations of the country. In the long run, this would give KB Home a far more stable business that would be more in line with overall housing conditions in the United States. Furthermore, if any of the housing markets in KB Home's portfolio were to indicate more downside than projected, the company could readily use its economies of scale to shift resources to more opportunistic portions of the portfolio.
Market penetration in the area of community development
Instead than focusing primarily on homebuilding, KB Home should seriously explore expanding its activities into community development. The development of shopping malls and other commercial real estate will complement KB Home's current homebuilding model while also diversifying its operations. Given that the surrounds in a community have a significant impact on the value of a home, KB Home can use additional community development activities to boost the value of its properties by making the surroundings more desirable for inhabitants. KB Home would gain more control over the entire community of houses it is creating if it expanded into this land. KB Home might potentially consider forming a joint venture with a counterparty that specializes in community development to build entire neighborhoods.
Tools to Diagnose Vulnerabilities of the Business Model
The company in the Residential Construction market by examining all five competitive factors. They have the ability to spot game-changing trends early on and move KB Home strategists may acquire a thorough view of what effects the profitability of quickly to seize the chance. KB Home's management may develop the Porter Five Forces in their favour by thoroughly comprehending them.
The five forces that have a substantial influence on a firm's profitability in its sector in his ground-breaking paper "Five Forces that Shape Strategy." These five forces analyses are now referred to as Porter Five Forces Analysis in the corporate world. The Porter Five Forces are as follows:
•Threat from Substitute Products
•Rivalry among the existing players.
•Threat of New Entrants
•Bargaining Power of Suppliers
•Bargaining Power of Buyers
The Porter Five Forces model is a comprehensive strategy framework that decouples strategic decision-making from a simple analysis of the current competition. The Porter Five Forces analysis looks at how KB Home can create a long-term competitive advantage in the Residential Construction business. Managers at KB Home may use Porter Five Forces to create a strategic position not only in the Residential Construction market, but also in the whole Industrial Goods industry.
1. Threats of New Entrants
New competitors in the residential construction industry offer innovation and new ways of doing things, putting pressure on KB Home to decrease prices, cut expenses, and provide new value propositions to customers. To maintain its competitive advantage, KB Home must handle all of these difficulties and construct effective barriers. KB Home can combat the threat of new entrants:
Through the development of new goods and services. New goods not only attract new consumers, but they also provide existing customers an incentive to purchase KB Home products.
By achieving economies of scale, the fixed cost per unit may be reduced.
Investing in research and development and building capacity. Newcomers are less likely to enter a dynamic market where established firms like KB Home define the norms on a regular basis. It drastically decreases the window of opportunity for new businesses to make spectacular profits, discouraging new entrants into the field.
2. Bargaining Power of Suppliers
Almost every company in the Residential Construction business obtains its raw materials from a variety of sources. Suppliers with a strong position in the market might reduce the margins that KB Home can make. Suppliers with clout in the Industrial Goods industry utilize their clout to extort higher prices from enterprises in the Residential Construction area. Higher supplier negotiating power has the overall effect of lowering the profitability of Residential Construction. KB Home can deal with Supplier Bargaining Power:
By establishing an efficient supply chain with many suppliers, and by experimenting with product designs utilizing various materials so that, if one raw material's price rises, the firm may switch to another.
Creating devoted suppliers who rely on the company for their livelihood. One of the things KB Home can learn from Wal-Mart and Nike is how they built third-party manufacturers whose whole company is dependent on them, resulting in a situation where these third-party manufacturers have substantially less negotiating leverage than Wal-Mart and Nike.
3. Bargaining Power of Buyers
Buyers may be a demanding bunch. They aim to get the greatest deal possible by spending the least amount of money feasible. In the long run, this put a strain on KB Home's profitability. The smaller and more strong KB Home's client base is, the greater the consumers' negotiating strength and capacity to demand growing discounts and incentives. KB Home can deal with Buyers' Bargaining Power:
a) By establishing a broad consumer base. This is beneficial in two ways. It will lower customers' negotiating power and provide the company the opportunity to simplify its sales and production processes.
b) By developing new items quickly.
c) Customers frequently seek discounts and special offers on well-known items, so if KB Home continues to introduce new products, it may reduce purchasers' negotiating power.
Existing KB Home consumers will be less likely to defect to competitors as a result of new offerings.
4. Threats of Substitute Products or Services
Industry profitability decreases when a new product or service solves comparable client wants in different ways. Services like Dropbox and Google Drive, for example, may be used to replace storage hardware devices. If a replacement product or service delivers a value proposition that is significantly different from the industry's current offerings, it poses a significant threat. KB Home can deal with the problem of counterfeit goods and services
a) By focusing on service rather than just selling products.
b) By focusing on the customer's basic need rather than the product they are purchasing.
c) By raising the cost of switching for customers.
5. Rivalry among the Existing Competitors
If there is fierce competition among current participants in a sector, prices will fall and the industry's overall profitability will suffer. The Residential Construction industry is fiercely competitive, and KB Home is no exception. This rivalry has a negative impact on the organization's overall long-term profitability. KB Home can deal with fierce competition among existing competitors in the residential construction industry
1. By establishing a long-term distinction
2. By increasing its scale, it will be able to compete more effectively.
3. Rather than fighting for a tiny market, collaborate with competitors to expand the market.
Value Chain Components
The mapping process
24447597790
Analysis
Raw material- Kb homes is dedicated to building quality homes hence the need of quality raw materials for building the homes which include cement, concrete and other necessary resources.
Human resource management- for the company to continue having better results in having best and quality homes it needs experienced and qualified labor work force which is responsibility of human resource department.
Technology development- Due to need for luxury apartments/homes is a must to embrace new technology so that we can have quality homes by using latest technological advancement in building and securing the homes.
Procurement – this can be linked to inbound logistics whereby goods or raw materials are bought and stored in the warehouse and stock is controlled from there to ensure safety of materials. Procurement department is responsible of acquiring raw materials needed by the company.
Operations – this depicts the process of using raw materials and employees working towards achieving the company’s goal or objectives.
Marketing- this entails advertising finished products in this case we have homes or houses which need to be sold.
Services -Activities required to maintain products and enhance consumer experience after sale of product. Selling of homes is the product offered by Kb homes.
Over the last 65 years kb homes has been able to build over 655,000 homes.
Value Chain Activities
Primary activities
Secondary/ Support activities
Primary activities
The following are a company's essential functions, or everything needed to create and sell a product:
Inbound logistics
Receiving, warehousing, and inventory control of a company's raw materials are all part of inbound logistics. This also includes all supplier ties. Inbound logistics, for example, would be the receipt and storage of things from a manufacturer that the e-commerce company intends to sell. Materials or substances used in the primary production or manufacturing of things are known as raw materials. Raw materials are commodities that are purchased and sold on global commodity exchanges. Because raw materials, like labor and capital, are factors of production, traders buy and sell them in the factor market. KB Homes, like any other construction company, uses a variety of building materials for various components of a home's construction. Architects consult structural engineers about the load-bearing capacities of the materials they design with, with concrete, steel, wood, masonry, and stone being the most frequent. Each has a different strength, weight, and durability, making it suitable for a variety of applications. The usage of building materials in the construction sector is governed by national standards and testing techniques, so they can be trusted to provide structural integrity. Architects also consider cost and aesthetics while selecting materials. Natural and man-made materials are the most common types of building materials. Natural materials include stone and wood, whereas man-made materials include concrete, masonry, and steel. Both, however, must be prepped or treated before being utilized in construction. The following is a list of the most commonly used building materials (Enzmann, (2012).
Operations,
Procedures for transforming raw materials into a final product or service are included in operations. This comprises transforming all inputs into outputs. This can include adding labels or branding, as well as bundling many products to increase the product's worth.
Clients of KB Homes visit their Design Studio, where they can look at anything design-related to help them create their dream home. A personal design consultant will work closely with you to select everything from appliances and cabinets to paint colors and countertops, flooring, and light fixtures. Then the construction begins, and people will be able to see every aspect come to life. Their construction superintendent will keep in touch with them at all times, delivering updates along the route. They can also go see it for themselves if they want to see it in person (Walters, (2002)
Outbound logistics,
The client is allowed to move in after the building is completed. There are a few basic factors that can influence the construction timeline. Rainy seasons or freezing temperatures, for example, are weather variables that can change the time frame in some places.
They recognize that purchasing a new home is a fantastic event, but it can also be overwhelming. Clients will be kept up to date on key news by a KB Home sales counselor, so you'll always know what's going on.
Marketing and sales
To guarantee that the product reaches the correct client groups, include advertising, promotions, sales force structure, distribution systems, pricing, and final product management.
We encourage walk-in visits to our sales offices and model homes, which are open for private in-person tours by appointment. Customers can schedule a live video tour using video conferencing software like Zoom, Skype, or FaceTime. Self-guided tours of our move-in ready houses are available for those homebuyers who want to explore on their own. They drastically improved their corporate website, kbhome.com, in late May. They updated the home search features and made the navigation more user-friendly.
Buyers can see photo galleries, take virtual home tours, examine interactive floor plans, and learn about the Design Studio using their web tools, which are easy to find.
Service
Installation, training, maintenance, repair, warranty, and after-sale services are all part of maintaining a product's performance after it has been manufactured.
Even after the client has unpacked their boxes, KB Homes will be there to address any questions that may arise. And, thanks to their 10-year limited warranty, if something goes wrong, they'll come back and fix it. Because they understand that things may go wrong in the future, and they will be there for you (Pil & Holweg, (2006).
When you construct a house with KB, you're building a connection that doesn't end when the keys are handed over. Their knowledgeable customer service team is there to assist you with any concerns or home repair issues you may have any questions or home repair issues.
Secondary/Support activities
Support activities assist the primary functions:
• Procurement is the process of obtaining raw materials for a product.
KB Homes works with a range of partners to provide clients with the construction materials they need to start building and finishing their house from the ground up.
Among their associates are:
1. Armstrong vinyl products that have received the Floor-Score accreditation, which is the most widely recognized indoor air quality certification standard used by more than 20 national and state-level environmental programs. Their products are water-resistant and low-maintenance, making them suitable for active families with dogs.
2. Boral provides the best roofing solutions available, with unrivaled beauty, durability, and energy efficiency.
3. ClosetMaid is the industry leader in home organizing and storage. Wire and laminate/wood storage solutions are available.
4. In many KB Home communities, Cox provides TV, Internet, phone service, and other services.
5. Dal-Tile is the world's leading maker of ceramic tile and the leader in porcelain tile and natural stone in America. Dal-Tile also offers quartz and granite countertop surfaces, which offer a variety of benefits like as slip resistance, water resistance, stain resistance, dent resistance, scratch resistance, fire resistance, and ease of maintenance.
6. Emser Tile is a global porcelain and ceramic tile, natural stone, and decorative tile designer and marketer. Pet and family safe, low maintenance, simple to clean, stain-resistant, mold-resistant, and waterproof, their comprehensive variety of tile and stone materials for every application. Furthermore, their products are free of PVC, VOCs, and allergies.
7. ENERGY STAR was designed to make it simple for customers to discover products, houses, and buildings that save energy and money while also contributing to environmental protection. The ENERGY STAR badge identifies highly efficient items and designates excellent energy performance in homes and buildings as the government-backed, trusted emblem for energy efficiency.
8. Generation Lighting provides a wide range of trend-forward, residential indoor and outdoor lighting at a great price. ENERGY STAR and California CEC Title 24 requirements are met.
9. Hunter Douglas has a full array of bespoke window treatments for your new home, including cordless alternatives that are safe for children and the Power-View motorization system. With increased window insulation, improved light control, and other features, these solutions can greatly improve the privacy and energy efficiency of your new houses.
Shaw Industries Group, Inc. is a global flooring company that sells carpet, resilient, hardwood, laminate, tile, and stone flooring to both residential and commercial customers. Shaw Industries is the largest carpet manufacturer in the world, and they create goods that can withstand the abuse of people and their dogs. Cradle to Cradle Certified products account for over 90% of their output.
• Innovation in technology
During research and development, technological development might entail creating and developing manufacturing procedures as well as automating operations. Equipment, hardware, software, processes, and technical knowledge are all included. Overall, technical development refers to a company's efforts to lower technology expenditures, such as migrating from a hardware storage system to the cloud. Builders have understood that, while technology is constantly improving, they must continue to improve in order to design healthier, smarter houses. Because we've been improving and recalibrating these technologies since the early 2000s, KB Home is a leader in this field (Sundbo (1998).
They are more concerned with how these technologies might evolve to fulfil the demands of homebuyers rather than whether technology will add value to a home's sale price or whether it is profitable. Many homebuilders are improving the principles of smart home technology in order to make it more accessible to homebuyers and to make it a standard for all homes. The KB Smart Home System, which includes a Google mesh network, Google Assistant, a Nest Hello video doorbell, and white glove installation services through our partner DISH, is one of the amenities we provide in a handful of our communities.
Our appliances, such as the Whirlpool Smart Oven and Smart-Washer, as well as goods like the U by Moen, which allows consumers to manage the shower via voice control and a smartphone application, are popular choices for our customers. Additional smart home items, such as light controls, motorized window shades, and door locks, are available at select KB Home Design Studios. We believe that everyone of our customers should be able to customize their new house and have the freedom to choose which design aspects they want to add. We upgrade a feature from an option to a standard when we believe that it is important enough to be integrated into the house.
Potential buyers are interested in smart appliances. In 2019, we saw a 44 percent increase in customer adoption of smart home appliances. Smart doorbells are also highly popular right now, with about a quarter of KB homebuyers opting for connected security gadgets. Last year, we also launched the Delos DARWIN home wellness network in our Genoa neighbourhood in Orange County. It has proven to be highly popular among KB homebuyers so far.
• Human resource management refers to the activities involved in attracting and retaining qualified people to aid in the product's conception, development, and marketing. To keep track of these, a human resource information system could be employed. In different markets, provide strategic planning, leadership, and organizational development to Regional and Division Presidents, as well as their senior leadership teams. Apply excellent business management skills to help your company achieve cost containment and better bottom-line results. In an ever-changing market of consolidation and growth cycles, Division Leadership requires constant support.
• The term "firm infrastructure" refers to an organization's structure, as well as its management, planning, accounting, finance, and quality-control systems. This can be seen in cloud computing and accounting software, for example. We work with two types of integration companies: one that installs technology before to move-in and another that activates the technology system in the new home after move-in. We form partnerships with businesses that share our commitment to providing excellent customer service. We also search for a good mix of client focus, technological knowledge, and standardized training.
Personalization will be emphasized in the future home, and homeowners will have a choice of interfaces. We'll continue to view voice command as a convenient interface, but ultimately, it's a question of personal preference. More sensors and artificial intelligence are expected in terms of infrastructure. More sensors will transform a smart home into a thinking home, allowing it to actively collect data and artificial intelligence.
Secondary category that should be Outsourced
Outsourcing a secondary category is a good idea.
A variety of duties and services can now be outsourced by businesses. They frequently outsource IT services, including as programming and application development, as well as technical support. Customer service and call centre tasks are routinely outsourced. Other sorts of work, such as industrial operations, human resources responsibilities, and financial services like bookkeeping and payroll processing, can all be outsourced. Companies can outsource entire divisions or just sections of a department, such as their IT department. Contracting out or business process outsourcing are terms used to describe outsourcing company services. Outsourcing might involve employing individual independent contractors or temporary office workers, as well as using a large third-party supplier like IBM to manage IT services or FedEx Supply Chain to manage third-party logistics services (Sandeep & Ravishankar (2015).
It is critical for a corporation to focus on the business partnership as much as the logistics when outsourcing responsibilities. Outsourcing is a partnership, not a purchase project, and it is more about managing relationships than service-level agreements. Maintaining and securing a trusted relationship is more difficult than establishing service levels and partnerships in outsourcing attempts. Construction contractors who are outsourced provide a wealth of experience and knowledge to the job site. Rather than learning on your dime, they are seasoned contractors with extensive industry knowledge. You are purchasing premium speed, equipment skills, and essential expertise by bringing in professionals to bridge all efficiency gaps. They are a complete package, with a wide range of experience in a variety of industries to back up their lengthy résumé. To execute your project utilizing their best practices, they should take no additional time or work. Construction project outsourcing is a prime illustration of streamlined development, which has been increased to efficiency as if by automation. Outsourcing commercial projects can save businesses money and time by allowing them to focus on their core business while their construction is handled for them. With an internal team, it's a foregone conclusion that you'll have a tight, constrained focus on the project. Outsourced contractors, on the other hand, are a fresh set of eyes with extensive industry knowledge. This provides new insights, a larger focus, and opportunities to improve efficiencies in ways you hadn't considered previously. Despite popular belief, using an outsourced construction company may save you more money than taking the traditional route. Contractors operate on a per-hourly basis, whether part-time or full-time management. That means you'll only be charged during working hours. Furthermore, other from the quote you agree on, there are no additional costs as previously stated.
You will obtain the most value for your money in terms of manpower, software tools, and technology within the specified budget. A construction contractor has an established network that irons out the kinks as the project progresses, from architects to problem-solving techs. Finally, you will have a turnkey building model that is customized to your needs.
Historical performance of KB home
The corporation achieved over 555 billion dollars in global net sales in 2021. These statistics have risen significantly in recent years, with a 6.8% increase in 2021 over the previous fiscal year. Over the previous few years,'s KB home gross profit margin has been consistent at roughly 25%. The corporation operated around eleven thousand outlets throughout the world as of the most recent year available, and this number is expected to rise as the company expands into new regions.
KB home both at International, and branches is the same, divisions that make up the company, with the latter accounting for the majority of the company's revenue. Sam's Club is unique in that, like Costco, it is a membership-only this construction firm. KB home’s U.S. sector alone produced approximately 370 billion dollars in 2021, accounting for around 67 percent of total sales. With 2,634 outlets as of January 2021, Mexico is KB home's single largest overseas market.
KB home is the primary provider of construction homes , apparel, and other services for millions of customers.
KB home anticipates several weekly consumer visits in 2021. KB home also has a popular e-commerce site, which is particularly active during the start of the holiday season. According to a poll conducted by Statista in 2020, 75 percent of respondents who bought from bargain chains in the previous 12 months did it from KB home. Meanwhile, 66 percent of respondents said they buy and get home services from KB home and they make several referrals on a regular basis in the same study. Despite its low prices and extensive inventory, KB home has a lower customer satisfaction rate than the typical construction business in the United States.
Corporate Governance/ Strategic Managers
Because effective corporate governance is a critical driver in delivering long-term stockholder value, the Board has developed a rigorous governance structure and leading practices to supervise our company's management, as defined below and described in other areas of this Proxy Statement*. Further down, we look at how the Board's corporate governance approach aligns with the Investor Stewardship Group's standards, which are a coalition of some of the world's largest investors and asset managers, including some of our top shareholders (MF SALTAJI (2013).
The Board is made up of a diverse set of persons with unique qualities and expertise, and there are no over-boarded directors.
All of our board members are independent, with the exception of our President and Chief Executive Officer ("CEO").
Only independent directors are permitted to participate on Board committees, and all members of the Audit and Compliance Committee are "audit committee financial specialists." On a year-round basis, we seek out to and interact with our stockholders about governance and other related issues. All unvested employee stock awards require double-trigger vesting in the event of a change of control.
Investors' boards are accountable to them. The Board of Directors is unclassified, and directors are elected annually. Directors must receive a majority of the votes cast in a non-contested election. Stockholders' voting rights should be commensurate to their financial investment in the company. Stockholders have the ability to communicate with us and the Board of Directors (see "Communicating with the Board").
The Board is led by a strong independent lead director with significant responsibilities and power (see "Board Leadership").
Independent directors lead all Board committees. Boards should establish structures and procedures to aid in their success.
In their industries, directors have a lot of expertise and information. Self-employed directors account for 92 percent of the board, with women and ethnic minorities accounting for 42 percent of the board.
The three Board committees are made up entirely of independent directors. Directors are very involved, with an average of 96 percent or higher attendance at Board and committee meetings in 2020, and they have access to all levels of the organization as well as outside experts for information on our business and their Board functions.
The Audit Committee oversees our management's annual enterprise risk management review, which identifies important business and operational risks based on probability, impact, and mitigating factors, and reports to the Board.
The results of this examination, which are based on a yearly audit plan established by a committee, influence the actions of our internal audit department. The internal audit department's performance against the permitted audit plan, as well as the department's audit results, are reported and examined at the committee's quarterly meetings and upon request. With the committee's lead responsible executives reporting to it on a regular basis, the committee keeps watch on cyber-security risks as well as our developing physical, electronic, and other protection techniques and activities. At each regular meeting, the committee also hears from our top finance, accounting, legal and compliance, and internal audit professionals about risks in their respective areas of responsibility. To discuss such matters, separate executive meetings with each of those individuals, as well as our Independent Auditor, are convened.
The Compensation Committee is in charge of an annual employee compensation risk assessment that FWC conducts in partnership with management, with a focus on potential policy and program design and implementation difficulties. On an annual basis, the committee evaluates our executive bench readiness and workforce diversity, as well as our adherence to our equity-based award grant policy, human capital development, and management succession planning (both short- and long-term) for all levels of our business. Pay agreements are established by our top human resources expe
