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Megatrends and Threats

Threats to the Barratt Developments are attributed to the 2008 recession. It marked the first drop of the gross domestic product (GDP) of the country, thus, shrinking the economy. The fall in GDP remained persistent until 2009 when it rose by 0.4 % (DCLG 2011, p. 162). Nonetheless, this only signalled a technical end of the recession, with its effects still influencing business activities. For example, Barratt’s operations experienced unprecedented challenges, including falling house prices, mounting debts, and drop in sales due to reducing demand among customers. The downturn led to high unemployment rates. As a result, consumers spend less on housing and instead utilize limited resources on essential commodities.

The company has a 29-year-old dead due thus affecting the reputation of the company. Consequently, the business is unable to attain efficiency. The company’s dead due also presents a primary threat to the company the reduction in the causes of dead due can result in a decrease in the company efficiency. The manager of the company is a threat to the company since he is convicted of a crime. This may also serve to affect the reputation of the nation, hence reducing the trust of the company .

The Barratt Developments’ survival continues to face stiff competition from three major companies: Taylor Wimpey plc, Berkeley Group, and Persimmon plc. As the company makes tireless efforts to become profitable again some of its competitors are performing pretty well in the already competitive and volatile corporate world (Abdullah, 2016, p. 34). Therefore, this is a potential constraint and threat to the stability and progress of Barratt Developments plc.Coupled with a stringent mortgage and decreased lending by financial institutions, stiff competition has made the company’s profitability remain unstable in the long-run.

The company will be prompted to change their operation and business structure due to the globalization trends in the contemporary world, particularly to match the different initiatives launched by the competition. Coupled with a stringent mortgage and decreased lending by financial institutions, stiff competition has made the company’s profitability remain unstable in the long-run.

Megatrends and Opportunities

New political decisions is another significant trend in the building and housing sector. Government interventions play an integral role in determining the regulatory and economic policies often considered in strategy formulation. The Home Owners Mortgage Support Policy Scheme (HOMSPS), for instance, tends to assist homeowners, lacking the ability to pay off mortgages but meet certain criteria by providing approximately 80% of the guaranteed total interest (DCLG 2015, p. 1). The company must also consider the increasingly favourable policies that have been introduced in the global market, thus promoting the business. The policy in question presents the company with the best possible opportunity to increase sales because as many people afford mortgages and related services, the more houses Barratt will sell.

Mergers and acquisitions also characterize the housing market. Acquisitions significantly contribute a great deal to the company’s commercial property development expansion (Abdullah, 2016, p. 5). Consequently, this creates additional opportunities because the Barratt Developments can invest in diversification, thus, being represented in various house building sectors. For example, David Wilson Homes serves Barratt in the up-scale market for housing and Wilson Browden Developments homes in the commercial property development and social real estate market. There are also Barratt Homes in residential housing. Typically, a diverse business entity tends to appeal to potential consumers. By enhancing a company’s reputation, diversification functions as a result-driven success strategy because it further reduces risks.

There is increased pressure from the environmental agencies, demanding that each of the real estate developers or builders adhere to the already established sustainability goals (Vescovi, 2013 P. 13). Also, residents and other customers tend to associate with sustainability-driven companies. The global sustainability goals present a primary challenge for the business. About that, advancement in technology and globalization play an integral role in dictating and defining a company’s competitive edge. In this regard, the Barratt Developments is utilizing these environmental demands and technological advancements to develop its reputation as well as a competitive advantage. In other words, the company is aligning the threats and opportunities mentioned above to its strategy to achieve its goals

In particular, the company uses the competitive nature of the market and sustainability demands to invest in innovation. With globalization, the Barratt Developments has had created a good public image by identifying and exploiting a distinct, Unique Selling Point (USP). In essence, it places much emphasis on innovating new building designs. Through advanced technology, for example, the company is leading in electron development and greenhouse designs (Barratt Developments, 2015 p. 6). As such, it is one of the sustainability-oriented business entities receiving government subsidies. Barratt Developments continue to regain its competitiveness in the market by taking advantage of the recovering economy from recession to develop a diverse portfolio. For example, it can venture in a specialised retirement home, which remains underdeveloped in the UK.

Impact to the construction industry because of the megatrend

A megatrend is defined as a long-term change affecting governments, economies, and societies permanently over a long period. They are responsible for driving other trends in financial markets regarding sales, innovation, and growth. The megatrends that have succeeded in altering the global economy are transportation, urbanization, communications, and technology. Megatrends have impacts to the construction industry. Firstly, due to the megatrends, there will be a high increase in the infrastructure ($1.2 trillion) by 2030 in all nations that are committed to specific time limits for approvals as well as in case the construction industry speeds up the slow permit and approval process ((Vescovi, 2013 P. 20). The megatrends in politics will ensure that the currently complicated requirements are simplified. Also, there is an increase in good governance that is a key requirement for sustainable development is helpful in curbing the geopolitical uncertainty and corruption that is holding back the construction industry.

Due to the megatrends, there is increasing the need for social inclusion which brings about sustainable development. The organization will be able to find talented and experienced workers from all over the globe who will join the urban construction boom thereby helping the construction industry to improve. However, the increase in constructions to meet the rising population in urban areas results in increased global greenhouse gas emissions (Vescovi, 2013 P. 25). This implies that the construction industry increases its footprint due to the increase in their solid waste and this negatively affects the environment. Finally, the bulk of the growth in global population is increasing in the developing countries, and the company needs to consider diversification to improve their performance. There should be an increase in investment yearly so as to build and maintain sustainable global infrastructure.

 

SWOT Summary

Strengths Weaknesses Opportunities Threats
High revenue and potentiality Small business units. Diversification geared towards risk reduction. Growing competition.
– Financially stable: Subsidies and related monetary assistance provided by the government.

– In 2015 was ranked as the most sustainable builder in UK leaving behind Berkeley’s and Persimmons

Small brand portfolio.

 

The company achieved more awards in 2014, almost as if it lost competitive advantage or it lost quality

 http://www.building.co.uk/top-150-contractors-and-housebuilders-ranked-by-turnover/5058112.article

– Inter serve Plc was 6th and jumped barrat and went to fourth

 

https://www.glassdoor.co.uk/Reviews/Barratt-Developments-Reviews-E10844.htm

New acquisitions that lead to a growing market. For example, Barratt Developments plc acquired the Wilson Bowden plc.

 

By reducing pollution and other negative externalities Barratt gets an opportunity to attract more investors as its business would be considered as low risk

Stringent mortgage criteria resulting in low profitability.

 

-rising cost of raw materials due to weaker pound (Brexit)

High growth rate: the company is recovering from the effects of the recession. Poor investment in development and research. Building houses using sustainable materials (meets the needs of new customers and allows to sell houses at higher prices, by at least 4% according to the recent study) Decreased lending by banks.
Reputation of one of the top sustainable builders in UK (Introduced first zero carbon house in UK) Business Diversification (for example, barratt has non-profit maintenance company that fixes Barratt house owners houses for really competitive prices) Corruption within the business by its key employees

 

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