Question

CASE STUDY- Redfin: Redefine Real Estate by HONG LUO HUAFENG YU ARTICLE

1. Conduct external research and create a SWOT analysis for Redfin of the 2020 real-estate industry.

2. Zillow and Redfin are two very different 'disruptors.' How does each of these companies create value?

3. What are the most important limiting factors affecting Redfin's growth? Should Kelman do national advertising? Should Kelman consider the full-time agent model?

Answer 1

1)REDFIN'S STRENGTH =

Distribution and reach-Redfin has a large number of outlet and a strong distribution network that ensures product availabilty to large number of customers.

Cost structure=The low cost structure helps Redfin to produce low cost product that enables customer affordibility.

Dealer Community: Redfin has a strong relationship with its dealers that not only provide them with supplies but also focus on promoting the company's products and training.

REDFIN'S WEAKNESS=

Research and Development: Even though Redfin is spending more than the average research and development expenditure within the industry, it is spending way less than a few players within the industry.

High Day Sales Inventory: The time it takes for products to be purchased and sold are higher than the industry average, meaning that REDFIN builds up on inventory adding unnecessary costs to the business.

Rented Property: A significant proportion of the property that REDFIN owns is rented rather than purchased.

REDFIN'S OPPORTUNITIES=

Internet: there has been an increase in the number of internet users all over the world. This means that there is an opportunity for REDFIN to expand their presence online; by using the internet to interact with its customers.

E-commerce= IT means that a lot of people are now making purchases online. REDFIN can earn revenue by opening online stores and making sales through these.

Social Media: there has been an increase in the number of social media users worldwide. The three social media platforms; Facebook, Twitter and Instagram, have shown the greatest number of increase in monthly active users. REDFIN can use social media to promote its products, interact with customers and collect feedback from them.

REDFIN'S THREATS=

Technological developments by competitors; New technological developments by a few competitors within the industry pose a threat to REDFIN as customer attracted to this new technology can be lost to competitors, decreasing REDFIN’s overall market share.

Suppliers: The bargaining power of suppliers has increased over the years with the decrease in the number of suppliers. This means that the costs of inputs could increase for REDFIN.

New entrants: There havebeen alot of new entrants in the market.

2)The USP of Redfin's centers on assisting home buyers and sellers.Their main objective is helping customers to make and save money in the real estate market.

The USP Zillow are customization and accessbility.They deal in home for living,buying,selling,renting and remodelling.

3)The limiting factors of REDFINS growth are it has cashflow problems=There is a lack of financial planning that has resulted in low cash flow.This is a reason why the company has to take loans.

The company also has low level of current asset when compared to the current liablities.This can create liquidity problems.

There have been also failures in merger due to its structure and culture.

Yes Kelman should do a national advertising because it would increase the net profit as there would be a higher turnover in sales.It would help in opening of new markets.The people who are unaware or were potential customers would get attracted.It would also help in maintaining reputation.

Yes Kelman should consider a full-time agent model this would help to incorporate social processes and non monetary influence on decision making and it would also create social links and environmental processes.