Company overview
Jones Lang LaSalle company is an American professional services firm which specializes in real estate and investment management. It is a British firm founded in 1783 in London. The company aims to provide an opportunity and amazing space from where people can achieve their dreams. The company built better future for the clients, communities, and people. It has 500 other subsidiary companies with 300 corporate offices. 83,500 employees are currently working in 80 different countries under the organization.
The company gives the services like leasing, real estate, capital markets, and tenant representation. JLL comes under the world’s most ethical companies. It is known as the largest publicly trading commercial real estate in the world. The company analyses the investment philosophy of clients, then interpret the requirements and respond to them accordingly giving final advice to the clients. The company has experts to improve the performance of the real estate in the field of life-science, hospitals, hotels, legal, office, retail and many others. The company has 200 offices to meet the global and regional needs (JLL, 2018).
In this report, The external environment is critically assessed with the help of PESTLE analysis and Porter’s five forces. After analysis of the external environment, some recommendation is also reported.
Economic:
In the world, US has the largest economy with the GDP $ 16.760 trillion and also showing a consistent rise.
(Source: Fuller, 2017)
The graph represents the US GDP growth rate is fluctuated. But in 2017, GDP rate of the US is increasing in the continuous manner. GDP of the US increases constantly which is a favourable factor for JLL company. The economic system of the country is developed. But the recession affects the country and it also increased the unemployment in the country. Unemployment rates affected the company by continuously rising in unemployment rates which does not help the company. The economic growth of the country around 4% on which businesses and customers have stepped up for spending the money.
(Source: Grahn, 2017)
The graph indicates the US unemployment rate which is continuously decreasing from 2009 to 2017. Continuously degradation in the unemployment growth rate has negatively affected the company. Unemployment rate of the company decreases the company growth which is not beneficial for JLL company because at this time period people invest less in the properties as compared to other. The company affected by the economic growth of the country. Economic conditions are developed by the government and political policies which affects the company growth in long run. JLL affected by the unemployment rates, interest rates and economic growth (Keith, 2017). Interest rate of the economy affects the company profitability. Increasing interest rate also increases the investment in the country. Therefore, the interest rate is very important for the real estate industry.
Services offered
(Source: Richter, 2017)
According to the graph, commercial real estate company take loans in the increasing rate from the financial institutions. Increasing interest rate of loan has a negative impact on the real estate industry because industry suffers loss. Oil rate affects the cost of the company in its project. If oil rate is increased then transportation cost of the company is also increasing which affected the profit margin. Nowadays, international financial institutions have a high interest rate which affects the growth and success of the company. It is a drawback that the company has few business links with the other countries which is less as compared to the others (Clough, and Bell, 2016).
Technological:
Technology and innovation are the main factors of the US economy. The country adopts the technology for the growth that is why the US face the competition with the rising economy. JLL also adopt the technology for business but the different types of technology affects the booking and rent of the properties online. The company invests $100m in the technology for improving the company services. Customer online order material and method of building homes creates the problem for the company. The US enhance the technology in the many areas such as environmental technology, biotechnology, and nanotechnology which opens the opportunities for the company (Ho, 2014). The company operates the business in the world that is why the company faces the competition from the countries like China. The company operates the business in many countries that is why the company has competition from the other countries like China. China has links in the world by investing or outward flow of goods.
(Sources: Molon, 2014)
This graph indicates the China investment rate in real estate industry. China has more technologies that is why it invest more in market expenses which is beneficial for expanding the business. JLL research group is presented the seventh annual technology. The various technologies and social provider provide financial support to the company. The company invest more in technology and it increases the cost. The company has a drawback to investing more in the technology instead of other activities. The company did not make the budget strategy properly from which they can invests in further activities (Srdjevic, Bajcetic, and Srdjevic, 2012).
The company uses the Porter Five Forces Framework to enhance the business. The factors are as below:
Rivalry:
James Long LaSalle is a well known popular company that is why company face more competition in the land development. Competitor faces this problem because company ignores the competition. By ignoring the competition, competitors introduce the product in the different market at the different time. Sometimes, competitors of the company differentiate the products and increase the variety of product. Competitors make their products different to the JLL company product from which they can expand their market but expand in the different place. The competitor of the company adopts the supply chain strategy from which they can supply the product on the time or increase the demand. They also provide the services to the client in all over the world. JLL sets the different segment as compared to the competitors that is why company comes in the top industries in top segments (Dobbs, 2014).
PESTLE Analysis
Substitute threat
James Long LaSalle is the kind of company which is high in demand. Reasons behind the high demand that the company provides the accommodation and it makes the investment value. The company has a number of competitors such as CBRE, Knight Frank, and many others. Competitors of the company make the different strategies as compared to the JLL strategies to grab the market. Competitors of the company operate in the fortune company with the good quality of management (Stead, and Stead, 2014). The company has threats to the other competitors but it takes the advantages by providing the properties on rent to those who want to take the property at the low cost.
The company makes the other strategies from which they can compete with the other competitors. JLL provide the properties to the customer in the low investment. But the company has to make more strategies for the development or to compete the competitors with some unique features in the services. The company uses the new technologies to reduces the cost and make the substitute services differ from the other companies. It has the positive impact on the profitability of the firm (Hagos, and Pal, 2010).
New Entrants Threat
JLL company does not require any permission or special authority to enter in the market. Because in the real estate industry no authority and permission is required at the time of entry into the industry. Even a single person does not need any to take the permission or the higher knowledge from which they can prevent himself to enter into the real estate industry (Hendel, Nevo, and Ortalo-Magné, 2009). To enter the market, the company or an individual require the financial stability or capacity to increase the finance by the financial resources. JLL has a number of competitors which strongly compete with the company. Therefore, the company has to develop their strategies or activities from which they can enter into the new firms by maintaining the customer demand (Porter, 2008).
Buyers Bargaining power
The company works in the two season that is a peak or lean season. In the peak season of the company, bargaining power of the buyers decreases or cannot be affected the company because at this time company offer its services at the high rates. In lean season, bargaining power of the buyer’s increases because at this time company demand decreases of their services at some level (Turnbull, and Valla, 2013).
Porter’s Five Forces Analysis
Bargaining power of the buyers relies on the rules, regulation, and laws which are made for the consumer protection. Some acts are also made which is related to the consumer protection. In real estate market, rates increases continuously due to increases population (Brueggeman, and Fisher, 2011) From this company take the advantage and this factor is beneficial for the company and offer the services at the higher rate. It affects in a positive way on the profit of the company.
Suppliers Bargaining power
The suppliers of the JLL company does not have strong power because of the particulars buyers. For the JLL, it is a beneficial factor because company invest in the low prices or offer at the high rates. In real estate industry, suppliers of the industries do not have strong bargaining power. The suppliers of the real estate do not have the power to pressurize the rates of property because of the limited number of buyers. The industry has five types of suppliers such as construction contractors, land sellers, capital providers, building material manufacturers and home furnishing. It is a favorable factor of Porter’s model for the JLL company because the company does not require to pay hire for the higher development.
Jones Lang LaSalle has huge favorable factors which company can expand the business as well developed. By using Porter Five Forces Framework the external environment is analyzed which is beneficial for the company (Mathooko, and Ogutu, 2015).
To analyze the competitor behavior, the company have to analysis the competitor’s profile. In external environmental company competitor analysis is also included. JLL competitors behaviors are as follows:
Jones Lang LaSalle has various competitors such as Knight Frank, CBRE, and others. The main competitor of the company is CBRE Group. CBRE comes under the world largest commercial real estate services. It has 80000 workforces in the company with 450 offices in the world. CBRE provides integrated services including project management, investment management, Property management, strategic consulting and others. It also provides the services in Real estate Industry. The main aim of the company is to maintain the position in the market. The current and the future objective of the company is to introduce the new products and services by adopting the new technology. CBRE Group making the strategies for future to grab the market opportunities (Rubin, 2015). For entering into the real estate industry, the company requires the sufficient capital and the ability to increase the finance by the financial resources. CBRE Group has the sufficient capital and also has a large number of resources. The company willing to maintain its stability in the market for this its regularly focus on the development of the human resources by giving them training (Upson, Ketchen, Connelly, and Ranft, 2012).
Economic Factors
The company also give attention to investing in its research and development department which makes the leading company in the market. CBRE Group has a large number of resources that is why it can arrange the resources within the time as per the customer’s demand. For providing the unique services and innovative company has to focus on the future objectives which can be accomplished by making the new strategies (Bose, 2008).
From the above analysis, it is indicated that JLL company have to be aware of the CBRE Group strategy. The company should adopt the new strategies by adopting the new technology. The strategy should be different from the CBRE Group strategies. New strategies cover all future objective (Paunescu, 2013). The company has to focus on the current strategy of the CBRE Group from which they make the different strategy and grab the market in the large area. By adopting the technology, the company has to make special services to the customer which is also beneficial for the profit of the company. The company should make the budget strategy for market expenses. There are many avenues in which company invest in marketing for expanding the business through email marketing, postal marketing instead of investing more in technology. The company should make the strategy for expanding the business or increases profits margin. For this, the company should take loans at the low rate from the other countries and invests at the high rate. These two strategies try to overcome the drawbacks of the company (Smith, 2018). On the basis of the analysis, competitors of the company are increased day by day that is why the company has to come out from its coziness and enter into the new market. For entering into the new market, the company requires the sufficient capital. By using the PESTLE company should aware of the external environment which is beneficial for the company such as economic, and technological factors. And by using the Porter Five Forces Framework company should analyze the behavior of the buyer, suppliers and the threats which company has to others external factors. By analyzing these factors company should adopt the strategies according to all scenario.
Conclusion
Jones Lang LaSalle company is the real estate company in America. For analyzing the external environment PESTLE, Porter Five Forces Framework is used. The analysis said that company has to maintain the political relationship by following rules and regulation of the government of the different countries. It has to adopt the new technology from which introduce the new product or services which is different from the other companies.
Technological Factors
The company has large numbers of a competitor in the market. The main competitor of the company is CBRE Group who compete for JLL in the market of real estate. The company should adopt some strategies which are not experienced by the other companies. CBRE Group has huge resources from which they can easily enter into the market and expand his business in the real estate industry. Therefore, the company takes steps carefully for making the strategies to enter into the new market of real estate.
It can be said that the company has a threat but also have some favorable factors to whom company make their strength and increase profitability and the productivity. Anyone can enter into this market with the sufficient cash which is a threat for the company. It is a perfect competition market that is why company take every decision by analyzing the external and internal environment.
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