Should SLSL move away from the high street to become a website-only estate agency?

Question 22 from the APT revision pack, considering the benefits and drawbacks of SLSL moving away from the high street to become and online-only estate agency.

I don't particularly think this was a good essay, but my teacher felt the evaluation and analysis were good.

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  • Created on: 11-06-12 21:27
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Question 22: Should SLSL move away from the high street to become a website-only estate
Moving away from the high street to become a website-only estate agency is one of the strategic
decisions facing SLSL because of the rising costs of a physical presence as rent is paid on two
branches, and the low cost of web-based marketing. For these reasons, the Roleys believe that their
costs may fall significantly if they move online. This proposal, as every strategic option does, may
have its benefits and drawbacks, especially as its suitability, acceptability and feasibility must be
considered. [Try to shorten this as I didn't get any marks due to "waffling".]
Having a physical presence on the high street is a good thing because it provides a point of contact
for both vendors and buyers; however, the Internet age is here and people tend to do many things
online, so this explains why the Roleys might be considering it. According to the case study, most of
SLSL's awareness was derived from the website, meaning that it is beneficial to be online; but is this
move suitable for the business? There is no evidence that a website-only form of operation will be
beneficial in terms of attracting vendors and buyers [L2]; and it is possible that vendors are attracted
to SLSL because of the décor of the offices, therefore getting rid of the high street offices may
affect the business negatively. It may affect it especially in terms of sales ­ although majority of
property awareness is derived from the website, the high street offices could also count for some
sales (see: Table 4 ­ "other/no data" 2%/3%/9%), so assuming the offices are closed, SLSL is looking
at losing an estimated £34,329 [L3] in revenue. This amount is very close to the business' objective
of a 4% revenue increase (£34,758); therefore moving away from the high street will not help
achieve this objective, and every strategic decision should be towards achieving an objective, thus
the move may prove to be an unattractive proposition.
Additionally, the proposal must be accepted by key stakeholders of the business ­ shareholders,
employees, and vendors. The Roleys have suggested this move, therefore they might like the idea,
but further research is recommended to show if the potential benefits outweigh the costs of moving
(loss of sales). Andrew, on the other hand, might react in either a negative or positive way. As a
rational shareholder, he might accept the move if there is scope for more profits, which
subsequently means more dividends; or as Hannah's father, he may be reluctant to accept it seeing
as his daughter's job may be jeopardised. But Andrew is a minority shareholder (10%), so his opinion
may not hold much weight. [L3/L4] The employees may also influence the decision to make this move
because getting rid of the offices suggests that fewer employees will be needed, so their job
security and morale may be weakened. Also, it may affect SLSL as they are a risk of losing some
valuable employees ­ especially if they decide on one central office and some employees are unable
to make the journey due to a possible increase of personal costs. Therefore, this proposal may not
be a particularly good idea.
Although there are a few disadvantages to the option, SLSL may save some money in the long run as
closing down two offices may provide more finances to fund the website investment and to settle
redundancy payments [L3/L4]. If they sell off the premises, the may potentially make £350,000 from
it (Balance sheet), therefore the move may not be a particularly bad one. But how likely is this? There
may be benefits in moving to a website-only agency, but there are corresponding and even more
pressing dangers ­ especially as SLSL operates in a monopolistically competitive market. If vendors
prefer a physical, personal touch and SLSL can't provide this, they may move to rival agencies; thus,
the move may affect the business negatively. [L4] SLSL should carry out more market research into
what vendors and buyers prefer before this decision is made because making a wrong decision
might implicate the business, at least in the short term.
Teacher's comment: Excellent analysis and evaluation.


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