This finding however is hinged on the condition that the company will endeavor to intensify measures to control cost of sales, which is actually one of the pillars of the company's business model.
1. Scope - The industry addresses the demand for housing in U.K. and the U.S. The homebuilding business process entails land banking, site development and sales, which are mostly attained thru financing.
A. Cause - According to Home Builders Federation chairman, i.e., Stewart Baseley, the slump is "unique" since it is due to the lower number of approved mortgage applications, attributable to global tightening in the credit market, rather than high unemployment or inflated borrowing interest rates. In fact, in March 2008, the volume of approved mortgage applications marked the lowest since 1997 (Bloomberg).
B. Effect - With the contraction of demand, house prices fell year on year in April 2008, homebuilders are compelled to cut down on overhead. As of July 2008, Bloomberg reports that about 60,000 employed in the industry are likely to lose their jobs in the process.
III. THE BUSINESS MODEL - George Wimpey plc's business model encompasses activities like acquisition of land, home and community design, urban regeneration and the development of supporting infrastructures (TaylorWimpey plc). Specifically, George Wimpey plc is engaged in the construction of apartments, 2-3 bedroom houses and 4-5 bedroom houses among others and is anchored to the business' four pillars (Wimpey Annual 2006) namely:
1. Land - Reduction of the real cost of land is essential and this can be achieved thru various strategies like the addition of medium and long term value added plots and close monitoring of land prices in the U.S. to resume timely and market driven land acquisition activities .
2. Costs - To become competitive in this industry, all projects must be cost driven and this can be done by establishing a framework that will measure and challenge every cost in the area.
3. Sales - Efficiency and effectiveness of the company's sales process are the key objectives reinforced by an excellent customer service. This plays a very vital role in realizing the company's revenue targets and desired profit margin.
4. People - Being a key element in the success, periodic and timely updating of the company's employee compensation package is vital in staying competitive in terms of retaining and procuring the best human resource in the industry. It also goes without saying that manpower training is a crucial in order to develop the future leaders of the organization that will bring the company into the future.
IV. HISTORY OF THE COMPANY (Finding Universe)
1. Humble Beginnings - The original owners were Walter Tomes and George Wimpey who initially worked as contractors for residential projects that required structural and decorative masonry. In 1893, Walter Tomes sold his