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SCENARIO PLANNING

The most identifiable variables which affect the real estate industry extracted from driving

forces & PESTEL Analysis are:-

• Growing use of internet and emerging new internet technology applications.

• Increasing globalization of the industry.

• Changes in long term industry growth rate.

• Changes in who buys the product and how they use it.

• Product innovation.

• Technology change.

• Marketing innovation.

• Entry or exit of major firm.

•

Diffusion of technical know how across more companies and more countries.• Change in cost and efficiency.

• Government Policies.

• Political Conditions.

All of the above factors are the drivers of change for the real estate industry and these factors act as the

driving forces in the industry.

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KEY ENVIRONMENTAL VARIABLE RANKING CHART

Most Certain

 

Least

Most Impact

Impact

Least Certain

The above chart shows the level of certainty of the driving forces and their impact on the industry. The

 problematic area is the one in which the driving forces are least certain but their impact on the industryand business is the most.

Growing Use of Internet

Globalization User’s Life Style

Industry Growth Rate

Government Policies

Marketing Innovation

Changes in Cost And Efficiency

Entry/Exit of Major Firms

Product InnovationNatural disasters

Political Instability

Economic changesPerfect markets

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As evident from the above chart there are four factors which are least certain and have got the most

valiant impact on the industry:-

• Product Innovation

• Perfect market

• Political Stability

• Economic Changes

SCENARIOS BASED ON POLITICIAL & ECONOMIC FACTORS:

Scenario 1:

Political Stability & Economic factors:In the political stability and economic factor case scenario the real estate industry will work more

flexible in this situation because in this case the industry is not facing any political hurdles from theGovt. and the economic factors like interest rate, growth rate, inflation rate and exchange rate are also

flexible and constant for years then the industry to start its business in any part of the world becausethese are the main factors which affects the industry badly if there is stability in the country then the

real estate industry will run successfully.

Scenario 2:

Political Stability & Non-Economic Factors:In the case of political stability and non-economic factors case scenario the real estate industry will run

successfully because the political situation is flexible but on the other hand the non-economic factors

will hurt the industry badly as there is no constant interest rate, growth rate, exchange rate andinflation rate because if this situation will happen than no one will be interested to invest their money

in real estate because there are more chances of loss in and in this situation the investment in real

estate industry will affect the particular company .

Scenario 3:

Political Instability & Economic Factor:In the political instability & economic factor case scenario the real estate industry will not be able to

start its business because of political instability the Govt. no company of real estate industry will take

that risk to invest in that type of situation but on the other hand there will be some companies of realestate industry which will take initiative to start their business because of stable and constant economic

factors as the interest rate, growth rate, inflation rate and exchange rate are favorable for them In

future as they have a contract according to their required demands with the Govt. in this type of 

scenario.

Scenario 4:

Political Instability & Non-Economic Factor:In the political instability & non-economic factor case scenario the real estate industry will not take

any type of initiative to start their business in that country where there is political instability and wherethe non-economic factors exist at the same time because both will affect the industry in a harmful way

as there is no charm for the entire industry to start its business in that country because the Govt. will

also not be able to give any incentive to the industry in this case.

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SCENARIOS BASED ON PRODUCT INNOVATION & PERFECT MARKETS

Scenario 1:

Innovation in Products & Perfect Market:

In innovation in Products and perfect market scenario, entry and exit from the real estate industry iscostless and become less intense.

• Large number of buyers and sellers

• All firms are price-takers.

• All firms have a relatively small market share.

• Buyers know the nature of the product being sold and the prices

charged by each firm.

• The industry is characterized by freedom of entry and exit.

• Perfect Information - Prices and quality of products are assumed to be known to all consumers

and producers.

• Transactions are Costless.

• Firms Aim to Maximize Profits - Firms aim to sell where marginal costs meet marginal

revenue, where they generate the most profit.

• Homogeneous Products – The characteristics of any given market good or service do not vary

across suppliers.

Scenario 2:

Innovation in Products & Imperfect Market:

In innovation and market imperfection scenario, the entry in the real estate industry is become moreintense because the innovation in products information is not quickly disclosed to all participants

in the industry and where the matching of buyers and sellers is not immediate.

Scenario 3:

No Innovation in Products & Perfect Market:

In No innovation in products and perfect market scenario: the real estate industry is less attentive for 

new entrants, because the cost of production is increased. All the sellers constructing homogenous products, and charge reasonable prices, but in this scenario situation the industry can not gain the

customers loyalty.

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Scenario 4:

No Innovation in Products & Imperfect Market

In No innovation in products and imperfect market scenario: the real estate industry growth will be

decrease, there is large discrimination in prices is developed in the market, which put a negative

impact on the real estate industry growth, and it become less attractive for investors.