Free Custom «Aldar Properties» Essay Sample
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The current economic situation at Aldar Properties is promising. Apparently, the promoters founded the company on a stable background in 2004. Since that time, the company performed profitably until the 2007-2010 financial crises. However, the entity regained its success in 2011 when it opted for venturing in additional activities to cater for the problems (Aldar Properties PJSC, 2010). Apart from the real estate and construction services, the organization extended its operations to schools, hospitals, and golf grounds among others. Moreover, the increased foreign investors’ interest in the real estate investment in the area boosted the company’s profitability. Furthermore, now, the status of the real estate industry in the UAE is promising. This argument solicits support from the increasing foreign investment in the area. The British, in particular, have shown an increased interest in the real estate operations.
It is true that many economic factors have affected the performance of Aldar Properties over the years. These factors include the financial crisis of 200-2010. During this period, the buying ability of the people reduced. As a result, the company faced challenges in such areas as debt management and low employee morale and output (Almonsour, 2008). Moreover, the investors also showed the decreased interest in the real estate investment. During this period, the organization faced a tough moment, thereby realizing losses from its operations. For instance, for the periods prior to 2010, the company’s losses amounted to 731.2 million dirhams (Aldar Properties PJSC, 2010). All these catastrophes resulted from the inability of people to buy houses and pay excessive rent.
Apparently, the global economic crisis affected the economy, the industry, and the company performance in general. In the economy affected by the crisis, inflation increased, which then led to the decreased purchasing ability of the consumers. Consequently, the real estate and construction industry suffered seriously. The clients lost their ability to buy houses and pay for the excessive rents. Moreover, the potential investors withdrew their operations, thereby making the industry incur losses (Cobham & Dibeh, 2009). Furthermore, Aldar Properties had a difficult financial period during this time. The entity could not manage its debts succinctly, while the employee morale and output were another challenge the company had to face. The ultimate repercussion from such a mayhem was a serious loss by the company. It suffered the first financial drop in 2009.
Despite the company doing better now, it has put in place several measures to ensure that it remains successful. Some of these activities include expanding its service provision to include schools and hospitals. Moreover, it seeks for the bail out from the government to help in sustaining its debts (Humphreys, Sachs, & Stiglitz, 2007). Additionally, the company has stressed corporate responsibility in such spheres as employee building, education, and improved working conditions. The company also works hard to consolidate its revenues and increase its profitability. This effort will allow the entity to remain immune to the possible losses in the future. The management considers such steps vital in ensuring that the company remains profitable in its activities.
The current efforts that Aldar Properties makes ensure that its profitability remains relevant in every respect. For instance, the move to boost the employees’ morale is pivotal in ensuring both quality and quantity of work in an entity. In Aldar, the effortis relevant since it has seen the company advancing from the previous failures to the improved profit (Kouame, 2009). Additionally, embracing foreign investment in the area is beneficial to the company and other organizations in this sphere of activities. It ensures that the industry has the adequate market to sustain its operations. Finally, such activities like government bailout remain relevant to any organization undergoing a financial crisis.
The strategy that Aldar has employed in controlling its operations is successful. When the company faced the global financial crisis, it opted to expand its service provision to encompass such areas like education, health, and sporting activities. Such operations had ensured that the company could regain its position after the financial blows it had suffered during the crisis. Currently, the company has reported a profit from its operations, which is an indication of success (Kouame, 2009). Moreover, it has managed to boost the morale of its employees. As a result, the entity has assured its members of the going concern. Additionally, Aldar has indicated a positive move, following the increased foreign investment in the area.
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Aldar’s management has 95% grading regarding how far they have brought the company (Aldar Properties PJSC, 2010). When the company started its operations in 2004, it never had any losses until it faced the global economic crisis. During this time, the company registered huge losses that almost saw it being insolvent. However, the efforts of the management that came up with various strategies enabled the organization to remain active to date. One of such strategies included seeking for a bail out from the government. Other entailed selling its convertible bonds amounting to $760 million and taking an impairment charge of $2.86 million (Aldar Properties PJSC, 2010). Additionally, they made the decision to expand the company’s business to include schools and health facilities. They converted such strategies to measurable objectives and performance targets. The management had also created these strategies to allow them to achieve their objectives. The company making profit is a clear indication of the implementation and the execution of such plans. Finally, the management has carried out evaluation performance to ensure that the company remains focused on its objectives.
Aldar Properties remains attractive in its status quo due to a variety of factors associated with its operation. In most cases, it is very difficult for an organization to remain steady, especially after undergoing a serious financial stress. However, the scenario is different with Aldar since the management has responded quickly to it problems (Cobham & Dibeh, 2010). Apart from seeking for alternative financial sources, the management ventured into new operations. As it has been mentioned, the company expanded its activities to include schools and health institutions. Moreover, the organization used the alternative financial aids like the bail out from the government to reinforce its continuity. Therefore, the entity’s ongoing operations are quite attractive.
During the case time period, the company’s competitive strength is still average. This argument is based on the fact that the company used to realize more profit compared to what it gains today. For instance, in the fiscal year 2010, the company realized a profit of 144 million dirhams as compared to its previous loss of 731.2 million dirhams in the preceding periods (Aldar Properties PJSC, 2010). Therefore, the phenomenon shows that the organization does not offer a better competition within the industry. Other entiities could reap more profits than the company. However, following the circumstances that it has faced, it is apparent that the company will regain its competitive ability in the near future.
Even though the case does not dwell much into the competitive forces, it tries to preempt the competitive forces surrounding the entity from various dimensions. In one instance, it highlights the changing market in the real estate and construction industry (Aldar Properties PJSC, 2010). The activity depends fully on the ability of the clients to buy the products offered by the company. However, when their purchasing power declines, it becomes difficult for the entity to optimize its operations. Moreover, facing the financial crisis had proved the major factor that reduced the competitive advantage that the company had established. It is true from the ongoing analysis that the case does not point out the possible competitors of the company. However, improving the competitive forces requires very little effort since most of them are already in place. Therefore, improving the competitive advantage of the company requires having the right personnel for the task.
The SWOT analysis tends to tackle various aspects of the company although in an indirect way. It pinpoints the strengths to include the managerial abilities and broader the market base. Thus, the company has gone beyond dealing in the real estate to include education and health. Some of its weaknesses encompass poor financial management during the crisis and slow recovery from its problems (Kouame, 2009). In addition, the company has opportunities in many areas, including expanding its services beyond real estate and construction. It also has a comparative competitive advantage in the industry. Finally, its threats involve economic crises and other companies that engage in real estate and construction activities. Some of the ways to improve its SWOT analysis entail engaging experts to perform a comprehensive research on the same. This procedure will allow the company to identify specific strengths, weaknesses, opportunities, and threats and act on them appropriately.
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The company has many values that have seen it reach the position where it is today. The first value is being committed. From the case, one realizes Aldar’s ability to remain committed to its goals and objectives. The organization began with a focus on the real estate operations and construction. Since then, it has since been striving to provide its clients with the best services so far. Another value that the company displays is innovativeness (Humphreys, Sachs, & Stiglitz, 2007). The case presents many situations, in which the management develops new ideas relevant to meeting the diverse needs of its clients. The management also has a strong determination to implementing its strategies and the business operations.
Aldar Properties displays a strategic recommendation essential for ensuring its operations after the 2007-2010 crises. The company almost became insolvent, which could mean the cessation of its operations. However, the management opted for various strategies that rescued the company from its failure (Almonsour, 2008). These plans included sourcing finances such areas like government bailout, impairment charges, and bond issues. Furthermore, they employed various ways to ensure that the employees remained motivated in their duties. Finally, the company expanded its service provision to include education, health, and sports (Aldar Properties PJSC, 2010). The entity’s management must ensure the implementation of these strategies and monitor them if the organization has to remain successful.
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