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Daft.Ie Business Position Essay

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Paper type: Essay

Analyse Daft’s current (2007) business position drawing on any models or theories that you consider appropriate Hamal and Prahalad began a debate which centres on a practise known as ‘strategic intent’. They argue that in order to achieve success an organisation must employ strategic intent. “Companies that have risen to global leadership over the past 20 years invariably began with ambitions that were out of all proportion to their resources and capabilities. But they created an obsession with winning at all levels of the organisation and then sustained that obsession over the 10 to 20 year quest for global leadership.

We term this obsession “strategic intent””. (Hamel, 2005). Strategic intent may be applied to Daft. ie as the Fallon brothers (Eamonn and Brian) began their company in 1997 with a very basic website that had only two offerings: house sharing and rental. In the first two years of the company’s existence it was considered to be a small niche player with 5,000 hits per month on the company website. It now has 50,000 registered users and offers a wide range of services to its customers. (Article).

Strategic intent conveys a sense of stretching your resources and capabilities, and compete in innovative ways. Hamal and Prahalad argue that Western companies trimmed their ambitions to match their resources instead of trying to achieve seemingly impossible goals. This is how Daft. ie have risen to become “not only Ireland’s largest property website, but also the busiest website”. (Article). Independent auditors confirmed in May 2006 that Daft. ie received requests for over 27 million pages of information. As the business grew Daft. e had to compete in innovative ways to satisfy its original audience. This led to the development of the company being a website based on renting and house sharing to one focused on sales, short term commercial and overseas properties. Daft. ie also stretched its capabilities, in-keeping with Hamal and Prahalad’s theory, to diverse from property to financial aspects such as a mortgage centre which allows users to apply online for a mortgage. The company went one step further by offering parking spaces for rental.

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One of the basic principles behind strategic intent is the idea that most managers embrace the concept of winning over time. This can be applied to Daft. ie as they aim to grow organically by building a community of loyal users who would promote the company by word-of-mouth. This is also consistent with the view argued by Hamal and Prahalad that strategic intent is stable over time. Some of Daft’s strategies are similar to that of Ansoff’s Growth Matrix. The matrix suggests that a business’ attempts to grow depending on whether it markets new/existing products in new/existing markets.

This can be done using; Market Penetration, Market Development, Product Development and Diversification. Looking at Daft’s current 2007 position Market Development and Product Development seem to be part of Daft’s overall business strategy. Product Development aims to introduce new products into existing markets. (website). The company has created numerous modifications to their website such as a mortgage centre for home buyers and parking spaces for rental which is a unique application on their website.

Daft understand that their customers have remained loyal and they have placed themselves in a strong position in the marketplace through their house sales element they have been offering since 2003, customers consistently return to daft as they guarantee an excellent range of property for all segments of the market. Market Development seeks to sell the companies existing products into new markets(website). This can clearly be seen as recently they have expanded their products into short-term commercial and overseas properties.

Since the company is the busiest website in Ireland, this strategy will undoubtedly be availed of by their Irish customers and also create business linkages with countries outside the island. They have somehow intertwined both of these strategies at the introduction of properties in Europe, America, Middle East, Asia and Africa to increase the options for Irish buyers but also to build relationships with new markets. The companies partnership agreements with foreign employment agencies is also a smart selling point, the brothers realise once they have created a link with new customer, their website will offer further prospects for these ew customers in the future. The company has avoided diversification as a strategy at present, they realise that this strategy may have a diverse effect on their overall goal which is to build on their core competencies. They believe the key is to stay focused on the property market as they know it well as are constantly striving to improve this area to keep meeting their customer needs. Porter’s Diamond can be used as a comparative tool to assess the business position of Daft. ie on a global scale.

The first attribute which Porter describes is factor endowments, which include inputs used as factors of production such as labour, land, natural resources, capital and infrastructure. Porter argues that these key factors are created not inherited for example a skilled labour force and technological infrastructure such as broadband. The government’s recent campaign to ensure broadband coverage to the nation has contributed to the success of Daft. ie enabling them to become Ireland’s busiest website receiving requests for over “27 million pages of information in May 2006”. (Case Study)

Local demand conditions are another factor of Porter’s Diamond. A company can gain a competitive advantage if domestic customers are demanding and require high standards of product quality and services. In 1999 demand began to increase for a website containing information on house sharing and property to let. “A highly reputable estate agent” anxiously wanted Brian to “upload properties urgently as customer demand was requiring a fast turnaround in properties to let”. (Case Study) This in turn led to a revamp of the website to make it more attractive to appeal to a wider audience.

Also the increased demand by customers in Ireland for a one stop property website has had the effect of Daft. ie further enhancing their product portfolio to include houses for sale, short-term, commercial and overseas property. A third attribute is the presence of related and supporting industries. The construction boom in Ireland in the past decade has contributed to an increased volume of offerings for property rental and sales in Ireland. Daft. ie has exploited this growth in the industry and have grown in conjunction with this boom.

A fourth feature which Porter expands on is strategy, structure, and rivalry of companies within a nation. In the long run local rivalry can actually put pressure on a firm to innovate and improve. Daft. ie has an array of indirect competitors which range from evening newspapers to traditional letting agencies. However with respect to the house sales section MyHome. ie is seen as a strong competitor as it has a “strong brand name and a good market presence”. Also with respect to house sales you have PropertyPartners. ie and SherryFitz. e. This domestic rivalry may have been the catalyst to Daft. ie expansion into the overseas market. The Fallon brothers have insisted on growing their business organically (via their twin policies of achieving growth through retained funding only and to using word of mouth as their solitary promotional tool). With regards to the future of the company explore the benefits/pitfalls of such a growth strategy. One of the main benefits that Daft has obtained through their organic growth structure is their loyal customer base.

They have successfully retained their customer base throughout the years. People that were looking for student and rental accommodation in the past are now returning to Daft seeking to buy their first property. Customers appreciate getting a personal response to their queries and thus have remained loyal to the company. Loyal customers ensure a successful future for Daft. The Fallon brothers decided not to spend large amounts of money on advertising and instead focus on offering a quality service to their customers who have continuously returned to Daft.

They have won various awards for their excellence which has led to the promotion of their company without actually spending money. These awards are a key indicator of how successful the company is and will attract new customers in the future. Daft’s main method of advertising their company is through word of mouth. Word of mouth advertising is extremely valuable as it tends to produce good quality results. (website)Customers are sometimes sceptical of standard advertising and are likely to believe recommendations from friends and family regarding products and services.

Daft have maintained a loyal customer base which means it has maintained a good reputation from their customers over the years. With regards to growing the business organically there is just as many benefits as there are pitfalls to this strategy. One major benefit with organic growth is that it is substantially cheaper than acquisitions which can sometimes write out the overall value of growth. The company is also able to strategically plan towards their organizational goals without interruptions from outside investors which can be the case when the company is under pressure from shareholders.

However Daft are restricted to the amount of money they can invest in the company. They only use retained funding to fund new ideas. Because they have no outside investment new ideas may have to be put on hold until they have they resources to fund it. The company must be patient and are limited to trying out new ideas one at a time as opposed to working on multiple new products and ideas. Another important factor to note is that the brothers are bearing all the risks involved in growing which can leave no openings for error on their part.

Identify future opportunities/possibilities for the company and offer suggestions as to how the company can exploit these. As mentioned in the article there are opportunities already available to Daft to improve their business. Since 2004 there has been an increase in the need for commercial property and although Daft do provide for this sector of the property market they could put more emphasis on marketing their commercial property services. An effective way to do this could be to engage in above the line advertising for any new services that Daft are offering.

This would work for the company as a whole as well as improving the awareness of their commercial property as well as any new services they offer in the future. Daft began and has remained an online company. It might be of interest to Daft to open a business premises. They should assess the benefits of this and see if it would be feasible to further expand through opening premises in a central location. Having a place where customers can go and directly communicate their options and queries with Daft employees would be a huge benefit to the company.

The American company Realtor. com offer a wide range of services similar to Daft. However they seem to offer a wider variety of services to their users such as a “home and garden”, “local mortgage rates”, information on market conditions in all different areas and also a link where customers can check their credit rating. They also have a wider extent of outside advertising by other companies on their site which generates extra revenue for the company.

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