Public Traded Company: RE/MAX Holdings Inc (Research Paper Sample)

Public Traded Company: RE/MAX Holdings Inc
Name
Institutional Affiliation
Determine the impact of the company's mission, vision, and primary stakeholders on its overall success.
RE/MAX Holdings Inc is under focus in this paper. The company is one of the world's leading franchisors in the real estate industry. The company franchises real estate brokerages services in the global environment under the name RE/MAX Brand, and mortgage brokerages in the United States under the name Mortgage Brand (Reuters, 2017). The mission statement of the company is ‘‘to be the worldwide real estate leader, achieving goals by helping others achieve theirs. Everybody wins''. The vision of the company is ‘‘to become a worldwide leader in providing real estate services’’.
The mission, vision, and primary stakeholders such as customers, employees, suppliers, and creditors, and stockholders have heavily influenced the success of the company. The mission and vision statement have provided a clear roadmap for achieving success. The high loyalty of customers towards the services offered by the company has enabled it to realize high-profit margin. The customers of the company mostly based in the United States and Canada have adopted positive perceptions toward services offered by the company (Reuters, 2017). The employees of the company are highly motivated to work harder to achieve the mission and vision. The high motivation of workers has enabled the company to utilize the full potentials of the employees in achieving success. The high motivation of employees can be attributed to factors such as high salary compensations, health benefits, and job recognition which have been embraced by the company.
Because the company has been making huge net profits in the past, the creditors have been willing to offer credit services for the company. In a nutshell, the high credit score of the company has been a major success of the company. The company has established a good relationship with the creditors; this has made it easier for the company to solicit loans and bank overdrafts. Similar to creditors, the suppliers have established a good relationship with the company. The positive relationship has enabled the company's supply chain management to function effectively (Reuters, 2017). Effective and efficient company's supply chain management has enabled it to minimize the cost of business operations; hence, it has pushed company's profitability high.
Analyze the five (5) forces of competition to determine how they impact the company.
The five forces of competition which are impacting the RE/MAX Holdings Inc include the threat of new entrants, competitive rivalry, bargaining power of suppliers, customers bargaining power, threats of substitute products. In terms of competitive rivalry, the company is operating in an open market and it is facing stiff competition from other well-established companies such as Realogy Holdings, Keller Williams Realty Inc, HomeServices of America Inc (Bloomberg, 2017). Even though owning such a franchised network requires a high commitment of financial resources and time, other competitors have invested heavily because of its profitability nature of the industry. Despite the huge financial commitment to start and run such a kind of venture, the high capital investment forces other small companies to stay away from the industry.
In terms of bargaining power of suppliers, the suppliers offering services to the company does not have high bargaining power. The low bargaining power of suppliers emanates from the fact that the company has many suppliers which are recruited on basis of merits. Therefore, the suppliers do not dictate the prices of products they supply to the company. When ordering for products from suppliers, they are normally ordered using bidding process. The bidding process makes suppliers charge low prices in order to win tenders. In terms of customers bargaining power of customers, the numbers of customers soliciting for services in the company are many hence each individual customer cannot exert pressure on company's products. The customers of the company are spread across the world and no particular customers purchase a significant portion of industry's output.
In terms of threats of substitute products, there is no significant substitute in the industry. The majority of the customers entirely depend on franchised services. It is important to understand that most the company’s customers are strongly attached to services offered by the company since they are perceived to be quality (Wild et al, 2013). Hence, there are low chances that the customers can switch to other related services. The customers' loyalties towards company's services are high; hence, customers cannot easily switch to other well-established products.
In terms of threats of new entrants to the industry, the company faces low threats to entry. Even the company faces stiff competition from other well-established companies such as Realogy Holdings, Keller Williams Realty Inc, HomeServices of America Inc; the companies entering the industry are very low (Bloomberg, 2017). The low entrance to the industry can be linked to barriers such as high investment cost, restrict legal and regulatory restrictions and high economies of scale for the already established companies. It is important to point out that the high capital requirements required to start and run such kind of venture scare away other small companies. In addition, high price wars for already established companies discourage new entrants to the industry.
Create a SWOT analysis for the company to determine its major strengths, weaknesses, opportunities, and threats.
RE/MAX Holdings Inc strengths include high financial resources. According to 2016 financial statements reports, the company received a revenue growth of over 5 percent this portrays an ongoing ability of the firm to gain and retain agents and sell new franchises. In 2016, the company gain over 7000 agents in various part of the world. In addition, the company has experienced business units. These experienced business units have pushed the company forward in terms of innovation and invention. The company has also portrayed a high level of competence in satisfying the needs of the customers. The company also has positive brand image and reputations.
In terms of weaknesses, RE/MAX Holdings Inc high investment in research and development. The high investment in research and development make it difficult for the company to realize the projected profits. The company also faces difficulties in managing various franchised agents in various part of the world (Bloomberg, 2017). Even though the company is well-established, it does not pay huge attention to marketing. Lack of marketing poses the risk of being overtaken by other rifle companies who have heavily invested in marketing. In terms of opportunities, the company new acquisition of New Jersey region gives a growth prospect. The company has also introduced new services and products. The launching of the new products offers a good opportunity for the company to grow.
The company has other opportunities such as global markets, growth profitability and rates, growing economy, and an increase in the income levels. It is important to note that the number of customers demanding for real estate services has increased significantly in the global environment; the positive global market growth provides a good opportunity for the company to venture in the global market (Adekola & Sergi, 2016). Since the profitability of the company has been improving for the past 3 years, the positive trend provides a good opportunity for the company to engage in the aggressive marketing of its products or employ qualify workforce.
In terms of threats, the company has experienced an increase in labor costs. The increase in labor costs has made the company to realize less profit as compared to its rifle companies. The tax changes and especially the introduction of other levies have led to the decline in net profits of the company. The external business risks emanating from increasing price wars is one of the major threats faced by the company. Other rifle companies such as HomeServices of America Inc are offering similar services as for RE/MAX Holding Inc but with cheaper prices (Bloomberg, 2017). The rising cost of raw materials is also a threat to the company. In the recent past, the global raw material prices have been increasing tremendously, this has forced the company to use high financial resources to acquire the raw materials.
Based on the SWOT analysis, outline a strategy for the company to capitalize on its strengths and opportunities, and minimize its weaknesses and threats.
To capitalize on the threats and opportunities, the company needs to engage vigorously in acquisitions of other firms to boost the growth prospect. The acquisition of other firms will enable the company to utilize the unexploited market as well as gain a global image. In addition, the company should engage in the innovation of new products to satisfy the changing needs of the market. The company needs to open other outlets in the global environment (Adekola & Sergi, 2016). Opening other outlets will enable the company to diversify the market. Diversifying the market will enable the company to minimize the risk of loss in case of an occurrence of uncertainty.
The company should also use the high financial endowment to acquire skilled personnel to manage its activities. Furthermore, the company should effectively utilize the experienced business units to properly manage the activities of the company. In addition, the company needs to consider cutting down the operation costs by either retrenching semi-skilled labor force and use the saved costs to acquire skilled labor costs.
Discuss the various levels and typ...