Colliers International A Virtual Company

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Colliers International -- A Virtual Company --

• Joel Black
• Casey McNellis
• Cam Dunlop
• Sachiko Ogawara

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Company Profile (1995)

• International real estate services corporation
• Network of independent companies
• 34 countries
• 184 offices
• 4,400 professionals
• 485 million revenue in 1994
• (50 up over 1993)

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Services

• Commercial brokerage services
• Office leasing and sales
• Industrial leasing and sales
• Site acquisition, etc.
• Corporate and financial services
• Corporate real estate consulting, etc
• Asset services
• Property management, etc
• Others
• Market research services, etc

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How to Become a Member Firm

• Get an approval by the existing membership
• Become a colliers shareholder
• Cross-ownership of shares with existing member
  firms is not required
• Pay annual due to headquarters
• Pay fees for intercompany referrals

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Virtual Company
Colliers Seattle
Colliers Mexico City
Colliers International
Colliers Paris
Colliers Sydney
Colliers Beijing
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Diversity of Members

• Different countries
• Different languages
• Different corporate cultures
• Family business big company
• 1 year old 150 years old
• Revenue 500,000 80 million
• Wide range of real estate service
• Strong point, professionals, skill, experience

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Why Do Members Want to Join?

• Share information
• Share market knowledge
• Access to clients and business opportunity

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 Talking about Colliers means talking about
what?

• Business affiliates?
• A business network?
• A multinational company?
• A global federation?
• A Virtual Company

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The clients expectations of real estate service
providers was changing from
single transactions in local markets
to
broker and advisory services on a broader scale
How well does Colliers fit this changing market
environment?
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Competitive advantage leading to success from the
early 1970s through 1995 (year the case was
written)

• Geographic coverage ability
• Intimate regional market knowledge on a worldwide
  scale
• Local decision making authority,
• Regional entrepreneurial firms with limited
  bureaucracy
• Economies of scale possibilities of a large
  organization

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Decentralized structure
Regional autonomy
Global reach
Success!Not so fast
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Number of national and international contracts
is a litmus test of Colliers value added
business
So what are the current threats to Colliers
in the new business environment?
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(No Transcript)
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Competitive forces facing Colliers in the future

• Suppliers
• Buyers
• Substitutes
• Existing competitors
• New entrants to the market

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• New entrants to marketplace/Existing competitors
• Other real estate alliances are developing
• Little proprietary product differentiation
• Capital requirements already in place
• Low switching costs
• May be able to provide better quality service
• More unified service across the organization

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• Customer/Buyers changing expectations
• Driving changes within the industry
• Changing requirement/needs
• Developing customer relationships
• Change from simpler transaction needs

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The growing sophistication of the clients is
driving the direction of service. Competitors
can enter with similar global structure to take
advantage of the new possibilities/business
opportunities.
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Porters generic strategies for achieving
proprietary advantage within the industry

• Cost leadership?
• Differentiation?
• Focus?

What method should Colliers use to remain
competitive?
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Past strategy and has successfully lead to

• Shared information, market knowledge,
• Shared access to clients, business opportunities
• Shared business experience and best practices
• Developed relationships among Collier firms
  through referrals and partnerships
• More entrepreneurial spirit with less bureaucracy

• Modern corporations looking to a global
  perspective

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Past strategy (cont.)

• Small entrepreneurial firms with the economies of
  scale of a large organization
• Taken advantage of the past needs of corporations
  that owned real estate

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 Weaknesses

• Speed ability of Colliers agents sharing market
  information
• Lack of control (central vs. local)
• McLernon described as the glue that holds
  Colliers together
• The great communicator
• What happens when he retires?
• Not all on even ground when to comes to
  supporting IT applications
• Cultural differences and IT support services

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• Lack of common equity ownership (not enforced)
  and control
• Ability to guarantee quality
• Enforce standards
• Provide seamless service
• Ensure accountability
• Market driven changes separating quality of
  services between large and small firms
• Customer requirement are changing
• Driving larger firms to new levels of service
• Smaller firms not able to follow
• Lack of adequate central control in such a
  decentralized organizational structure

No yardstick to measure good service
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New competitive strategy

• Broad target differentiation of services through
  quality improvements assisted by improved
  technology implementation
• IT to build additional barriers to entry
• Improve knowledge barrier of sales force
• Improve speed and access to specialized market
  knowledge
• Leverage product and service range
• Better global implementation of IT
• Improve world wide regional market knowledge
  advantage through better communications
• Improve central service quality control
• Assist in improving better local control

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• Network information transmission speed
• Specialized information moved fast and far can
  continue to assure strategic competitive
  advantage in the new e-business environment
• Differentiate quality of service through
  additional technology
• Better sharing of best practices
• Improved knowledge management
• Provide a new form of glue to hold the
  organization together
• More current information from regional sources
• Better communication
• Improved organizational control in such a
  decentralized flat organizational structure
•  
•  

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• Assist in ensuring quality levels and
  accountability
• Help manage member expectations
• Help manage customer expectations

• Maintain and improve on decentralized
• regional specialized market knowledge
• and advantages of regional business
• autonomy through economies of centralized
• communication and technology
• improvements to better take advantage of
• customer driven expanding global
• E-business environment!

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Recommendation

• Centralize Colliers IT
• Increase speed, accuracy and ability of Colliers
  agents to share market information

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Advantages of Centralized IT

• Empower sales agents
• Practical example
• Enhances competitive edge

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Centralized IT is Aligned with Colliers
Incentive Program!

• Colliers has a compensation plan based on
  referrals
• A referral fee is 10 - 50 of the final sale
• Centralized IT makes obtaining a referral fee
  easy
• Revisit practical example

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Costs of IT Could be Shared

• Collier could divide the costs of new IT based on
  the percentage of total revenues contributed
• Any other ideas on how to split the IT bill?

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Centralized IT is Aligned with Core Competencies

• Office sales leasing accounts for 21 of world
  wide revenues
• Industrial sales leasing accounts for 19 of
  world wide revenues
• Totals 40 of revenues!!!

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Retain Company Vision Global Breadth, Local
Depth

• Only centralize IT
• Allow International regions to retain cultural
  business practices
• Enhance Colliers referral capabilities, then
  allow each regional office to negotiate

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Standardization

• ISO9001
• Internal and external quality requirements
• This is the requirement standard you use to
  assess your ability to meet customer and
  applicable regulatory requirements and thereby
  address customer satisfaction

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Standardization

• Lotus Notes
• Information management software for e-mail, web
  pages, intranet applications, etc.
• A common IT platform enables Colliers to share
  information globally and better serve their
  clients needs.

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A One-Firm Concept

• Not centralization
• While tactical and operational activities should
  be decentralized, any firm with the Collier name
  should share the same vision and mission.
• This can be reinforced by profit-sharing plans
  and referral programs so the different affiliates
  dont consider each other competitors.

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Whats In A Name?

• Colliers parted ways with affiliate Auguste
  Thouard.
• Auguste Thouard had offices in France, Belgium,
  and Spain.
• Walter Pinkard cited differences in vision as the
  reason
• Colliers plans to develop new partnerships to
  fill the vacancy left by Auguste Thouard.
• Difference in vision across the company can
  weaken the company name.

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Colliers International Today

• 251 offices
• 52 countries
• 9,000 professional employees
• 465 million square feet under management.
• 1.1 billion in revenues in 2000.

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Last Year

• In their 2000 Perspective Overview, Colliers
  predicted office and industrial markets
  throughout the Western United States would remain
  strong.
• Very low vacancy rates

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And in 2001

• U.S. downtown office market
• demand all but disappeared during the first
  three months of 2001.
• Vacancy rate increase by almost a full point to
  8.6
• U.S. suburban office market
• demand slowed significantly during the first
  three months of 2001.
• Vacancy rose to 10.8, a full point increase.

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Why?

• Downward trend in the economy
• Declining numbers in retail sales has caused many
  retailers to scale back expansion and layoff
  workers.
• Especially prevalent in the high-tech industry.
• In response, developers have cut back projects
  this year.

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Areas of Expansion

• Home Improvement
• Home Depot
• Sears
• Discount Retailers
• Wal-Mart
• Target
• Drug Stores
• Grocery Stores

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Target Markets For Retailers

• Atlanta
• Las Vegas
• Phoenix
• San Diego

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Who Cares?

• These target markets are based upon several
  criteria
• Population growth
• Personal income
• Housing starts
• Gross Metropolitan Product
• Retailers are targeting these cities for
  expansion.

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Thank You from Group 5 (in name only)
If you have any easy questions, please feel free
to ask