VII. Objectives, Strategy Recommendations Recommendations and Action Plans
•
Strategic Objectives
The strategic objective of DMCI homes is to be the clear second in the middle market residential industry. From the market analysis, analysis, there is a wide lead of the big three real estate companies companies versus the lower real estate companies. The big three companies have competencies in different segments of the market. Ayala Land through Ayala Land Premier and Alveo Land is dominant in the luxury real estate market although it also has interest in the middle income segment (Avida) and is entering the low cost segment. Megaworld is the market leader in the middle income segment. Vista Land prevails in the low cost segment through its subsidiary Camella Homes although it also has interest in the high end and middle income segment.
The other objectives of DMCI Homes are stated and defined in the revised vision and mission statement of the company. DMCI Homes also wants to aim achievement in their best level of satisfying their customers in improving its projects, programs and the like. DMCI Homes’ financial objective is to target monetary systems in measurable terms like the profits, percentage in increase in sales through certain period of time and the like.
Year 2015 2016 2017 2018 2019 * Increase revenue by 10% annually
Sales Revenue 62,217 68,438 75,281 82,809 91,089
* Recommended Business and Organizational Strategies
Net Income 11,852 13,037 14,340 15,774 17,351
BUSINESS STRATEGIES Take advantage of the foreign
Since the country is being promoted as a retirement haven for
retirees that are seeking for units
foreigners, DMCI Homes could use this opportunity to
that
them
expand their target market and cater to those who are not even
tranquil
Filipinos. This particular market, if tapped, could generate
will
convenience
provide of
a
residential environment.
revenues for the company. To penetrate this particular market, DMCI Homes should establish a presence within foreign countries where a huge number of foreigners show interest in retiring in the Philippines, This would again end up in establishing international sales offices to widen the distribution network of the company. Also, the Philippine Retirement Authority has made a list of foreigners who have plans of staying in the Philippines right after they retire. DMCI Homes could use this information to gain insight as to what particular nationalities show intention
Mak e
us e
of
of having the last years of their lives in the Philippines. dev el opi ng It has been the edge of DMCI Homes to construct resort-
r e s i d en t i a l c o nd omi n i u m
u ni t s themed condominiums at a lower price compared to their
t h at wo ul d t a r g et t h e r a pi dl y gr owi ng popul at i on offi nanc i al l y e mp owe r e dy o un gpr o f e s s i o na l s .
competitors without compromising its quality. The generation of young professionals that has emerged in recent years is constantly growing and continuously adding up to the demand for residential-type of buildings which are near their workplace. DMCI Homes should penetrate the key business districts in Manila because it is where the large population of young professionals are concentrated. These young professionals
have the mind- set of buying life-time investments that are close
to
their
workplace
and
to
other
commercial
establishments. This generation of the youth are those who want to live in a dynamic setting where everything they want
Pursue an integrated marketing
is as close and as easy to grasp by the hand. Advertising through local and OFW channels will be used to
communications
to
build up a long term image of the DMCI Homes brand as a
awareness
provider of high quality homes at a good value. Public
strengthen
brand
plan
among OFWs.
relations such as sponsorship of articles and blogs will be used to re-enforce the DMCI brand further as a quality property developer. Events such as real estate conferences and participation in overseas trade fairs will be used to promote specific projects. Lastly, personal selling done by external brokers will be used to build up buyer preference, conviction
Enhance website to include e-
and deliver actual sales. The company has an existing website, dmciinternational.com,
commerce capability and promote
but this acts only as a catalogue of the projects with only a
it as an alternative distribution
brief description of a development and contact information.
channel.
The website can be improved to allow for an interactive open house that will allow users to explore in 3D a selected property. The website will also build its e-commerce capability by allowing for online reservations that will allow for real time inventory monitoring and online payment of reservations. By enhancing its website, DMCI can strengthen its limited distribution network buyers both locally and abroad.
Launch incentive program for
Use of word of mouth advertising would be an effective
satisfied home owners to refer
strategy to penetrate the market further. Existing home buyers
family and friends to DMCI
will get either a cash incentive or a discount in the selling
Homes.
price if they refer their family members and friends. This will be especially effective given tightly knit family ties of Filipinos as buyers may want to live close to their extended family members. To be able to effectively promote the referral program, DMCI will need to intensify its Customer Relationship Management. DMCI should continue to promote the DMCI brand and products to its existing customers. A relationship manager from customer care group should be assigned to maintain and strengthen its relationships with existing home buyers and will introduce the referral program to them. An intensive database will also be kept to determine if existing buyers have
Encourage the market with the
relatives or friends to refer to. Homes are considered to be lifetime investments. They do not
capacity to buy condominium
depreciate but rather appreciate in value. This mind-set has
units as a form of long-term
been prevalent among Filipinos. And the disparity, in terms of
investment.
value, of owning a unit in a condominium is none than that of owning a residential house. This mentality among Filipino buyers should be reiterated in ad campaigns of DMCI Homes. The company should use an intensive integrated marketing approach to its potential buyers. This will affect the brand awareness of Filipino buyers relative to DMCI Homes.
In pursuing an intensive integrated marketing approach, DMCI Homes should also strengthen its public relations. Events outside of the country like international real estate conferences should be utilized by the company to introduce innovations in their developments and introduce DMCI Homes to the global market. With increased capitalization in marketing and promotions and effective advertising, there is a possibility that it would deliver sales globally. And with the funds gathered, DMCI Homes could look into the possibility of doing an IPO to be independent of that of DMCI Holdings. Also, DMCI Homes could look into the opportunity of borrowing money from banks for capitalization. With their stable financial condition, DMCI Homes could now borrow a huge amount of money to finance all their expenditures in
Maximize the presence of the
every new project. The construction arm of DMCI Holdings which is a sister
company in cities where there is
company of DMCI Homes has been winning bids in
limited space and make use of the
constructing highways and
other
related
private
and
shift in trends toward smaller unit government initiated infrastructure construction projects. sizes.
Some of these projects are located outside of the metro and are mainly in provinces. DMCI Homes could take advantage of this and bid for untapped surrounding areas for residential development. To utilize the synergy among the businesses under DMCI Holdings, DMCI Homes could be the first to construct a
community of high-rise residential buildings in provincial areas to give potential buyers an urban feel. This will in turn contribute to considering provincial areas as emerging growth centers that would help boost the economy of the country. To add up, tapping the provincial areas for development would have DMCI Homes garner a huge market share in the industry because there are only a few developers in those
Partner with BPOs for DMCI to
areas, most of which are not known in the metro. One of the concerns of the BPO industry is its high turnover
provide housing solutions to BPO
rate. DMCI can offer a solution by partnering with BPOs and
workers.
banks to provide housing to BPO workers. DMCI can offer discounts to employees of corporate accounts. BPO workers can enjoy lower rates provided a bond with the BPO company. 1 bedroom and 2 bedroom units can be marketed directly to these employees. Additionally, DMCI can approach BPO companies to buy several units that which the companies can allow their employees to live in as part of their benefits. A corporate account manager under the sales division will study this segment in detail and propose the best solution to
Strengthen international presence
the housing requirements of the BPO sector. DMCI should increase the number of external brokers it’s
especially in untapped countries
partnering with outside the country to widen its distribution
by
network to the growing OFW market. Currently, DMCI only
partnering
broker.
with
external
covers 12 countries but this can be increased by partnering with external brokers in countries like the Saudi Arabia,
Germany and Norway. Saudi Arabia is the third most popular destination for OFWs with year on year increasing by 5%. Along with its Dubai office, this will strengthen DMCI’s presence in the Middle East which currently only constitutes 22% of DMCI’s total international sales. The Middle East is the area where Megaworld, the leader in the middle market segment, sources most of its international sales from Germany and Norway are also potential countries where DMCI can venture into through a partnership with a local broker. This strategy will be supplemented by an Integrated Marketing Communications strategy (described later) that will build brand equity to both local and international markets. For the international market, DMCI will join real estate trade fairs and hosts property conferences to build brand awareness for both potential buyers and broker partners. Target the families of OFWs and The portion of the population who has the rising purchasing encourage them to purchase a
power are those who are classified under the middle-income
unit for their family member segment of buyers. This segment is primarily comprised of abroad as a form of lifetime
OFWs who remit their income from abroad to their families
investment.
in the Philippines. To strongly penetrate the market of OFWs, DMCI Homes should capitalize in establishing sales offices abroad. DMCI Homes is behind its competitor in terms of its scope of distribution network. But since DMCI Homes cannot compete in establishing a global distribution network against its competitors, the researchers advise to modernize the existing
website, dmciinternational.com, which acts only as a catalogue of its projects with only a brief description of a development and contact information.
ORGANIZATIONAL STRATEGIES Additional positions for Launch incentive program for satisfied home owners to refer relationship managers.
family and friends to DMCI Homes. For the incentive program strategy to be implemented, existing clients should be satisfied. A relationship manager will be used to market the incentive program to the DMCI Home owners. An important duty will also to strengthen the company’s CRM. Relationship managers would determine
Additional
personnel
to
institutional sales.
potential home owners that would have possible referrals. A corporate sales unit will be added to form partnerships with BPO companies in line with the market development strategy to target BPO workers: Partner with BPOs for DMCI to provide housing solutions to BPO workers. The new unit will forge partnerships with corporate
Concentrate DMCI’s real estate
institutions to provide housing solutions to their employees. To reduce operating cost and increase business focus, DMCI
business to DMCI Homes.
Holdings should concentrate all of its property businesses to DMCI Homes. Currently, there is a small portion of its housing business belonging to its construction arm. These projects should be transferred to DMCI Homes to fully utilize the infrastructure and property development experience of DMCI Homes.
Additional personnel to support This is in line with market penetration strategy to extend international sales divisions.
further its presence to the OFW market. Increase international presence by adding in house sales and partnering with external brokers abroad. Additional personnel will be used to manage and support the operations of the different international offices. Personnel will be used to develop partnerships with brokers abroad and to help DMCI comply with foreign regulations in establishing sales offices.
* Financial Projections
The following table shows the comparison of values in the income statement of DMCI Homes taken from the notes section of the consolidated income statement of DMCI Holdings from 2015 to 2019. DMCI Homes is aiming to have at least 10% increases in revenues annually.
Sales Revenue Cost of Goods Sold Gross Profit Selling, General and Administrative Expenses Interest and Other Income (Expenses) Income Before Tax Taxes
2015 62,217 !2,7$ 1%, #$
2016 6,!" !6,%7 21,!#
2017 7#,21 #1,67# 2",6$"
2018 2,$% #6,!2 2#,%6"
2019 %1,$% 62,#26 2,##%
6,%17
7,6$
,"6
%,2$!
1$,12!
#2" 1#,#7 1,"1# 1",$"7 7,7$" !!,7!
#7# 17,1"# 1,!!6 1!,"!$ ,!7" !%,"61
6"2 1,! 1,#%$ 1#,77! %,"2$ #!,2%7
6%# 2$,7"2 1,7!% 17,"#1 1$, 2#2 #%,726
!76 1!,162 1,1%6 11,852 Net Income 7,$$" Dividends !$,7%# Retained Earnings * Computed using the 2014 Financial Statement
* Growth Ratio
2015 VOLUME Number of Units 5,732 Total Residential Units 3,439 Volume Growth 62% REVENUE Sales and Reservation 9,800 Recognized Revenues 3,905 Revenue Growth 103% TOTAL MARKET SHARE Market Size 418,396 Market Share 0.8% Market Share Growth 0.3% MIDDLE INCOME MARKET SHARE Market Size 211,031 Market Share 1.7% Market Share Growth 1.7% INCOME Net Income 11,852 Income Growth 233%
2016
2017
2018
2019
5,095 3,057 11%
7,265 4,359 43%
8,254 4,952 14%
9,333 5,600 13%
8,711 3,711 6%
12,642 6,953 87%
14,362 7,899 14%
16,240 8,932 13%
426,764 0.9% 0.0%
435,299 1.6% 0.7%
444,005 1.8% 0.2%
452,885 2.0% 0.2%
215,251 1.7% 0.1%
219,556 3.2% 1.4%
223,948 3.5% 0.4%
228,427 3.9% 0.4%
1",$"7 74%
1!,"!$ 14%
1#,77! 21%
17,"#1 19%
* Departmental Programs
MARKETIN DEPARTMENT a. Integrated &ar'eting &ar'eting (ill lead in t)e *lanning and e+ection o- t)e integrated
ommnications
mar'eting commnications *lan o- t)e com*any to raise brand a(areness. /)e I& *lan0s target adience (ill be middle income Os loo'ing to settle in t)e P)ili**ines or *rovide )omes to t)eir -amilies. /)e commnication objective is to bild brand a(areness or t)e ability to identi-y t)e 3&I brand among Os in t)e )osing category. Overall advertising message (ill be t)at 3&I 4omes delivers t)eir dreams -or t)eir -amilies to )ave a 5ality )ose t)ey can call )ome. /)e mar'eting de*artment (ill contract an advertising com*any to *ro*ose and e+ecte t)e ad cam*aign based on t)is ad message. iven t)e Integrated &ar'eting a**roac), 3&I (ill tilie several commnications mode to deliver a co)erent and e--ective message and *romote brand a(areness. /V advertisements (ill -ocs on t)e 3&I brand 8as o**osed to a s*eci-ic *roject9 as a *ro*erty develo*er t)at o--ers o*timal 5ality and vale -or money to t)eir -amilies in t)e P)ili**ines. :vents (ill also be organied to in-orm bot) e+ternal bro'ers and byers o- t)e -eatres and ;ni5e Selling Pro*ositions o- s*eci-ic develo*ments. 3&I (ill *artici*ate in real estate -airs and organie byer conventions. Pblicity (ill be sed by s*onsoring magaine articles and *ro*erty
b. Re-erral Program
blogs to (rite abot s*eci-ic *rojects. &ar'eting (ill s**ort cstomer care in t)e re-erral *rogram. &ar'eting (ill *rovide t)e needed *rinted materials to *ro*erly commnicate t)e message o- t)e re-erral *rogram. /)e material
s)old not only em*)asie t)e *ossible monetary re(ards o- re-erring a -amily member to 3&I develo*ments bt t)e c)ance to be close to yor e+tended -amily and -riends. !A"E! DEPARTMENT a. Online Sales Strategy
/)e sales division (ill lead in t)e e+ection o- t)e e
b. 3evelo*ment o- t)e O &ar'et
o- t)e (ebsite. Anot)er mar'et develo*ment strategy is to ta* t)e O segment. /)e sales de*artment (ill lead t)is initiative by -orging *artners)i*s (it) varios e+ternal bro'ers in contries 3&I )as no *resence in. An e+ternal bro'er (ill be em*loyed to mar'et 3&I in Sadi Arabia, ()ose O de*loyment is gro(ing at #=. ermany and
>or(ay are also among t)e to* destinations o- OS bt 3&I does not )ave *resence. /)e sales team (ill also *artner (it) e+ternal bro'ers in t)ese :ro*ean contries. Aside -rom (idening 3&I0s *resence in *o*lar O destinations, 3&I (ill also strengt)en its )old over anada and ?a*an ()ic) also )as an
c. 3evelo*ment o- t)e @PO &ar'et
increasing nmber o- O de*loyments. @PO (or'ers (ill be targeted as a *ossible ne( mar'et to ta*, to be able to innovate a )osing soltion to @PO (or'ers, t)e 'ey acconts nit nder sales (ill lead t)is initiative. /oget)er (it) mar'eting, -inance and constrction, t)ey (ill -ormlate a cor*orate )osing *ac'age s*eci-ically geared to(ard @PO (or'ers.
#$!T%MER DEPARTMENT a. stomer are stomer care (ill lead in t)e mar'et *enetration strategy to ta* t)e
more t)an 1$,$$$ e+isting )ome o(ners o- 3&I. or t)e re-erral *rogram to (or', e+isting )ome o(ners s)old contine to remain satis-ied. /)e relations)i* manager (it)in t)e cstomer care de*artment (ill be in c)arge o- t)is. A more im*ortant dty o- t)e cstomer care gro* is to *date t)e R& o- 3&I not jst -or *ros*ective clients bt -or e+isting )ome o(ners. In satis-ying t)e crrent needs o- t)e )ome o(ners, cstomer care (ill also data mine -or *ossible re-errals t)at can be obtained -rom e+isting )ome o(ners. /)e relations)i* manager (ill t)en concentrate )is)er e--orts in t)ese identi-ied cstomers and introdce t)e e+isting *rodcts o- 3&I as (ell as t)e -inancial incentive o- re-erring someone to t)e *rogram. &$!INE!! DE'E"%PMENT a. :+*ansion o- Pro*erty /)e @siness 3evelo*ment division (ill lead in t)e com*any0s
e+*ansionary strategy in t)e @ area. /)e bsiness develo*ment
(ill a**roac) t)e @ administration and ot)er realtors to ac5ire ne( tracts o- land sc) as t)e ne(ly o*ened >ort)ern @ area. :+*ansionary activities (ill occr (it)in t)ree years a-ter t)e *lanned IPO. Investment in *ro*erties (ill gro( -rom t)e crrent *rice. Additional *ro*erties (ill be tilied -or additional mid and )ig) rise develo*ments. (INAN#IA" DEPARTMENT a. IPO Strategies inance (ill o(n t)e IPO strategy. I- t)e IPO is (ell received, t)e
remaining ca*ital re5irement can be sorced t)r a re
-orecasted demand -or nits. Sales (ill *rovide indication as to t)e ty*e o- nits t)at are on demand 8stdio ty*e, 1 bedroom, 2 bedrooms9. onstrction (ill design its develo*ments based on t)e *rojection *rovided by sales. /)rog) Sales and O*erations *lanning, inventory levels (ill be monitored by t)e constrction de*artment. O*erational synergy (it) 3&I gro* (ill also be strengt)ened to
redce cost and manage 5ality better. All o- t)e constrction and steel -abrication re5irements o- 3&I 4omes (ill be corsed t)rog) 3& onsnji 8constrction9 and ABP 8Steel -abrication9. Additionally, 3&I 4omes0 *rc)ases (ill be *riced lo(er since it is an internal conter*arty o- t)ese 3&I sbsidiaries. 3&I 4omes0 ra( material re5irements (ill be integrated to 3&I ro*0s re5irements. /)is (ill give 3&I additional bargaining *o(er to lo(er t)e ac5isition *rice o- its ra( materials and redce 3&I 4omes0 bild cost. )$MAN RE!%$R#E DEPARTMENT a. Additional Personnels 4man resorces (ill need to )ire and train #$ additional *ersonnel to man t)e di--erent strategies o- 3&I sc) as t)e im*rovement o- its distribtion c)annel. As a motivational tool -or its em*loyees, 3&I (ill send )ig) *er-orming sales *ersonnel to international sales o--ices. 4R (ill also lanc) training to *re*are ne( )ires -or t)e real estate licensre e+am ()ic) is a re5irement by t)e government. 4R (ill also revie( t)e *er-ormance a**raisal system to inclde cstomer service to bot) ne( and e+isting cstomers as a 'ey *er-ormance indicator to sales and cstomer care *ersonnel. Sales 5otas indicated in t)e *er-ormance a**raisal system (ill be revised to -ocs more on sales coming -rom Os and @POs to align it (it) t)e mar'et develo*ment strategies.