Pulte Homes Business Profile Pulte Term Paper
- Length: 5 pages
- Subject: Business
- Type: Term Paper
- Paper: #57168584
Excerpt from Term Paper :
But becoming an industry leader isn't all about consumer research and decreasing production lead-time (though both of those factors help). Positioning within the market is also key in order to overcome competition from other home construction firms. In that regard, Pulte Homes has benefited not only from strong economic conditions -- low mortgage rates that have spurred on new home construction, for instance -- but also from its broadened product offerings ("Fitch Rates" par. 3). This might seem like an odd statement to make. After all, in the home construction industry, how many new products can one company develop? In the end, construction is always of homes. Nevertheless, Pulte Homes has managed to create new product offerings, particularly by creating new types of homes that will appeal to different market segments.
For example, Pulte Homes recently acquired Del Webb in an effort to reposition itself within the industry by diversifying its profile and expanding its product offerings to the active adult segment ("Fitch Rates" par. 5). Del Webb had previously been one of the leading manufacturers of homes for seniors in the nation. When Pulte Homes acquired the Del Webb name, it bought a foothold into an incredibly large and lucrative market segment. Of course, this acquisition did not come cheap. Major industry growth, however, permitted Pulte Homes to acquire Del Webb for $1.7 billion in July 2001. With that acquisition, Pulte Homes became one of the ten largest home manufacturers in the country who collectively control 20% of the market. This strong position is excellent for Pulte Homes, as analysts have predicted that those top ten manufacturers will account for 40% of the market by 2010 (Lee 130).
Much of the external success of Pulte Homes can be attributed to its internal organization. Pulte Homes currently employs about 13,000 employees in twenty-six U.S. states. Internally, the company is organized in an entrepreneurial fashion at the division level, with greater autonomy being afforded the lower levels of the organization (Leger par. 3, 5). In addition, Pulte Homes has internal leadership programs that are designed to help encourage internal advancement. The whole of the corporate culture is one constructed around the value of teamwork. However, that teamwork is weighed against the "bottom line" in order to only continue organizational practices that effectively promote the company (Leger par. 13-14). Pulte Homes continuously analyses its internal structure and organization so it can be fine-tuned to respond and adapt to prevailing market and industry trends. This adaptability and introspective nature has had a profoundly positive effect on the attitudes of employees as well as the effectiveness of the organization.
Pulte Homes has a strong operating profile regarding its sales, margins, and overall profitability. This is largely due to geographic diversity, product diversity, and a disciplined financial strategy ("Fitch Rates" par. 3). Its success in the industry owes much to extensive consumer research, continued market repositioning, and efforts to reduce production time. The Michigan-based company, as a result, built 29,000 homes in 2002 alone, a fact that was very good for its business (Lee 130). Pulte Homes has also benefited from the strong housing market and low mortgage rates. The company's stock increased from $20/share in spring 2000 to around $75/share in late 2003. William Pulte's current 17% share of the company is now worth more than $795 million (Lee 130).
In short, Pulte Homes is an incredibly strong Fortune 500 company that is positioned to take advantage of continued growth in the industry for some years to come. Its excellent operating strategies, combined with a good internal organization and thoughtful market positioning has put it at the forefront of the industry. If the market for new homes continues to grow, we should expect to see Pulte Homes grow right along with it. Even if the demand for housing would dip in the coming years, Pulte Homes' solid strategies and conservative business policies should allow the company to weather such a situation admirably.
"Fitch Rates Pulte Homes' $650MM Debt Issue 'BBB+'." Business Wire 8 Feb. 2005. 13 Nov. 2005 .