MGT 489 sec 16

Name: Adnan Mahfuz Khan

ID: 1721938630

Mid 1

Strategy Formulation process:

The main emphasis of this practice is the execution of the strategic

management process, which encompasses nearly all the tasks and roles that
have been undertaken to allow the company to handle transition effectively in
the long term.

The three stages to be followed:

1. Strategy Formulation,
2. Strategy Implementation, and
3. Strategy Evaluation and Control.

1. Strategy formulation- Strategy formulation is the method of deciding and

defining an organization's goals, mission and objectives, and selecting
acceptable and effective paths or action plans among all possible
approaches necessary to accomplish them.

Organization goal- It was created in 1964 as a private limited company to

reduce the housing problems in Dhaka. Currently the Goal is to capture market
share and become the market leader again, by providing customers with
superior value in terms of product and service, by building long-term customer
relationship in the competitive market, by developing its human capital, by
adapting new ideas and to provide timely and fair financial and non-financial
reporting to stakeholders.

The slogan of EHL is Apan Thhikana Gore Dey, which can be translated to
‘’Creates Your Own Home’’.
Mission- The mission is to build and develop environment friendly flats,
commercial build- ings and land projects using the highest standard of safety,
architecture, engineering and technology.

Vision- The vision of EHL is to be a world-class real estate developer through

maximum value creation by providing quality homes and business, whereas its
mission is to build and develop environment friendly flats, commercial build-
ings and land projects using the highest standard of safety, architecture,
engineering and technology.

SWOT analysis
Strength-
 Once a monopoly leader of the market and thus has immense
experience.
 Only publicly listed real estate company in the country.
 Strong Brand Recognition.
 Positive ‘word-of-mouth’ marketing
 EHL measures its flat size excluding the community space, such as
mosque, garage etc.
 Provides complimentary service such as free supervision.
 Retain customer loyalty.

Weakness-
 scarcity of land in the urban areas of Bangladesh
 the number of well-reputed suppliers is limited
 Its pricing strategy depends on the cost of land, construction cost, which
is usually high
 The company is a bit rigid in offering discounts
 Lack of online advertisement
 EHL management does not prefer television advertisement.
 Low sales- The number of unsold flats stands at about 10,000 at present
 Inadequate necessary infrastructure
Opportunity-
 Approximate investment in this industry is BDT 250 billion (
 Higher target people. For example, upper to middle class people
 Rise of nuclear families
 High demand- approximately 4 million new houses annually for the next
20 years.

Threat-
 Increased price of supplies
 Lost 40-year-old market leadership to East West Property Development
(Pvt.)
 Lack of iconic construction compared to competitor’s projects.

Identifying the Issues

a. Promotion: Only having an online presence via Website is not enough. In
the era of e-commerce, their presence in online should generate great
exposure. They under estimated the power of TV Advertisement
presence as well.
b. Differentiation: EHL lost their 40-year-old market leadership to East
West Property Development (Pvt.) and is now in the 2nd position. With
past experiences, reputation and resources, they should be able to get
back in the leadership position through calculated risks and strategy.
They should be able to introduce new ideas and incorporate new
features, which the competitors are not following.
c. Target segment: 70% of their customer are upper-middle class. While
25% for middle class and 5% for upper class. They are losing customers
on upper class, which is caused by lack of trust and loyalty, aroused from
the inadequate number of ironic infrastructures. And their middle-class
customers are also decreasing because of flats targeted for middle class
customers got expensive due to increase in price of supplies and land.
People shift to other real estate companies because the price is very
competitive and the customers are sensitive.
d. Traditional thinking: EHL failing to affiliate with other companies has led
to less exposure, which gradually caused them a decline in their growth.
 Collaborative approach is necessary for a company to sustain their
success.
e. Lack of vertical or horizontal integrations: As price of raw materials are
getting expensive day by day, EHL has no bargaining power.

The possible solutions will be discussed in the coming parts.

2. Strategy Implementation
Business Level Strategy:
Big companies typically have several company divisions in their portfolio.
Beneath a common parent corporate home, bigger companies also identify
them as separate strategic business units (SBUs). Business level strategy
focuses on the which segment the corporation wants to serve.

There are 4 generic business level strategies, out of which I would

recommend both broad and focused differentiation strategies to attract
middle-class customers and upper-class customers consecutively.

Broad differentiation strategy: Focusing on the differentiating the product

and services, giving competitive edge above its rivals, which will also target
a broad spectrum, in this case the middle-class. Only 25% of their
customers are middle class, which suggests that there is potential of
capturing more middle-class customers.

Strategies include:
a. Vertical integration: EHL should expand their business vertically by
buying of some suppliers, which would ultimately help EHL with raw
materials in the long run, and EHL also might benefit from lower cost of
supplies in this way. East West Property Development (Pvt.) is part of
the Bashundhara group and has the opportunity to be benefitted from
other Bashundhara supplier companies. By this strategy EHL will be able
to minimize their cost and be able to sell their flats in more competitive
prices.
b. Satisfying customer need: Now-a-days flats are sold readymade. Thus,
creating lack of customization for the customers. Giving options for the
 number of room or washroom to be selected by the customers can
attract more customers.
c. Promotion: EHL focuses on positive word of mouth, while other new
entrants are getting great exposure over short time. EHL should invest in
TV advertisements with moderate exposure, as TV is a great source of
advertisement. EHL should also focus on e-commerce and have great
presence and online crowd. Bproperty has gained lot of exposure in the
recent days from fb advertisements, which EHL should also focus on.

Focused differentiation strategy: Focusing on the differentiating the product

and services, giving competitive edge above its rivals, which will also target a
narrow spectrum, in this case the upper-class. Only 5% of their customers are
upper-class, which suggests that there is potential of capturing more upper-
class customer.

a. Collaborative approach: Partnering or collaborating with other

companies. For instance, EHL could partner with Interior décor
companies to provide state of the art furniture’s and home appliances to
target the upper-class customers. The idea is to be different from your
competitors and to give better experience for the worthiest customers.
b. Technology: With the help of 3D visualization in smart phones, EHL can
provide the designs, space and room plans of their flats to their
customer from virtually anywhere in the world. With the help of VR or
even only the screen and motion sensor of smart phones, this is possible
and will create value to the company.
c. Building infrastructure: Taking on eye catchy and ironic projects to get
back the reputation once EHL held.

When Differentiation can be achieved, I would suggest to not increase

price, because customers are already price sensitive. Thus, the
differentiation will increase demand for those segments. Increase in
demand will lead to increase in supplies. Therefore, with the help from
economies of scale, in this case, cheaper raw materials, it is possible to
lower costs. Which will ultimately higher profitability and growth of the
company and capture more market share.
Functional Strategy: Strategies are needed at this stage, specifically to discuss
how these practices and projects are to be successfully and efficiently carried
out. It focuses on improving every activities of a value chain in a company by
superior efficiency, quality, innovation and customer responsiveness. It’s about
securing competitive advantage by lowering costs and differentiation.

1) Efficient: With main resources like land which is scarce, it is tough for
EHL to be efficient. But as said earlier EHL can expand vertically and
supply their own raw materials. Or they can create long term
relationship with suppliers and get access to longer credit days and low-
cost materials.
2) Quality: Quality in terms of service can be 3D visualization of flats, And
Quality in terms of Product can be achieved by providing state of the art
furniture’s and home appliances for upper class customers.
3) Innovation: 3D visualization of the whole flat in a smart phone creates
attractive and more accessible to the flats.
4) Customer responsiveness: Interacting with customers online. EHL can
introduce AI replying bot to reply fasted to their customers online. For
example, basic FAQ could be programmed to be answered by AI.

With these functional strategies, EHL has the capable of having

distinctive competencies, for which they can have a competitive edge
over their rivals. This would ultimately create value to the company and
also create sudden marketing buzz, another benefit for EHls exposure.

3. Strategy Evaluation
EHL still has 20% market share, and with effective measures, calculated risks
and strategies discusses earlier, I feel like EHL could gradually get on the top
again. The process is long and tiring and most importantly costly, including
the vertical expansion and investments in Research and Development for AI
powered answering bots and 3D visualization software system. But, I
believe, the return from this investment would be rewarding for EHL.
Human resources plays a key role in the process and should be motivated to
work efficiently to mitigate some of the cost.