Discuss which business models, generic strategies, and market segments are the most profitable in home building industry (HBI).
In three pages, discuss which business models, generic strategies, and market segments are the most profitable in home building industry (HBI).
The home building industry is a unique dynamic in today's economy. Despite several consecutive years of a depressed economy, the home building industry appears to have self-inoculated itself against the economic woes of every other facet of the American economy. The industry has managed to do so through strategic business models, successful generic strategies, and utilizing strong market segments that have created windfalls of profit in the home building industry.
Strategic Business Models
Each industry is often challenged with developing a unique business model that allows for growth and profitability in their market. In developing a strategic business model, the home building industry must identify some key parameters. First, the industry must identify what trend is currently driving the market. The current key driver in homebuilding is the level and direction of interest rates (Construction.com, 2006). In developing a strategic business model to sell newly built homes, many contractors are embracing the financial side of the market. In fact, industry insiders believe that the rock bottom low interests enjoyed in today's real estate market are driving the sales of new homes more than even traditional factors like location and supply and demand. The low interest rates are allowing buyers to afford larger homes, which in turn are allowing contractors to see astronomic levels of new home sales. As interest rates continue to flourish at record low levels, interest rate focus will serve as a popular business model for many contractors in the home building industry.
A second business model that has proven successful in driving profits in the home building industry is developing a successful pricing strategy. Pricing in the construction industry can never be uniform, if for no other reason than the occasional unpredictability of so many different market factors (Knilans, 2014). A successful pricing strategy is a unique dynamic in the home building industry. Contractors may enjoy a booming market that allows ...
This solution will provide the student with examples of how good business models, implementation of generic strategies, and catering to specific market segments have generated profit for those in the home building industry.