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Cendant 1 Cendant Corporation: Real Estate Division Case Study Prepared by: Takefumi Kawahara Cendant 2 1. Company Overview Company Description Founded in 1997, Cendant Corporation is a publicly held company that provides real estate services, hospitality services, travel distribution services, and vehicle services (“Cendant,” 2005). In Cendant’s Real Estate Services Division, there are Real Estate Franchise Group, Real Estate Brokerage, Relocation, and Title and Settlement Services (“Cendant,” 2005). Through its Real Estate Services Division, Cendant franchises and operates real estate brokerage businesses. However, Cendant, itself, does not own or operate real estate brokerage offices, and instead, Cendant “provides their franchisee customers with services designed to increase their revenue and profitability” (Annual Report, 1998, p.16). The franchise agreements give the franchisee the right to use the Cendant name and real estate service marks in return for royalty payments on gross commissions generated by the franchises (“Cendant,” 2005). Cendant also provides home buyers with mortgages, and assists in employee relocation offers mortgage services (“Cendant,” 2005). The relocation group offers a variety of services to relocate employees, including the home sale and purchase assistance services, independent home marketing support, and management of other personal moving affairs (“Cendant,” 2005). Ranking In the real estate industry, Cendant is a leading company in many categories. According to Cendant Corporation, 2005, and Dun & Bradstreet Inc., 2005, Cendant’s Real Estate Division is; Cendant 3 • The world’s largest franchisor • The World’s largest operator of residential real estate brokerages; • A leading commercial real estate brokerage system • A leading settlement services company • The largest number of employees (87,308 employees) Management Structure Cendant Corporation includes real estate services, hospitality services, travel distribution services, and vehicle services (“Cendant,” 2005). In addition, Cendant’s Real Estate Services Division consists of four business units (“Cendant,” 2005). The management structure and the business units with its subsidiaries are described in charts below. Cendant’s Organizational Chart Chief Executive Officer Corporate Executive Officers Board of Directors Real Estate Hospitality Travel Vehicle Services Services Services Distribution Services Cendant 4 Real Estate Services Business Units Real Estate Franchises CENTURY 21® Coldwell Banker® Coldwell Banker Commercial® ERA® Southeby’s International Realty® Real Estate Brokerage NRT Relocation Cendant Mobility® Title and Settlement Services Cendant Settlement Services Chief Competitors The primary competitor for Cendant is Prudential Financial Inc. with “The Prudential Insurance Company of America, one of the largest life insurance companies in the U.S.” (“International Directory,” 2002 & “Prudential,” 2005). Prudential’s real estate group also offers real estate and relocation services in U.S. and Canada, and unifies real estate brokerage franchise and relocation service business (“Prudential,” 2005). 2. Marketing Challenge In 1999, when Cendant realized that real estate industry was being revolutionized dramatically by technology, it decided to accept its businesses to the Internet technology, to maximize the opportunities in an information economy (Annual Report, 1999, p.7). In addition, Cendant had been focusing on the acquisition of other companies to expand its profits and market share before 1999, but Cendant shifted the strategy to concentrate on Cendant 5 maximize the potential profits and growth of its internal existing businesses as with the discovery of accounting fraud after the merger between Hospitality Franchise Systems, Inc. (HFS) and Comp-U-Card International Inc. (CUC) in 1997 (Annual Report, 1998, p.4). For the real estate division, the Convergence Strategy was employed to connect online and off-line assets as well as the Value Circle Strategy to facilitate Real Estate Franchise Group, Real Estate Brokerage, Relocation, and Title and Settlement Services, and to accomplish cross-marketing in the business units (Annual Report, 1998, p.3). 3. Response to Market Challenge Technologies employed In order to achieve the Convergence strategy and the Value Circle strategy in the real estate division, “move.com” Web site was launched in 1999 for the foundation of new Internet portal, based on “rentnet.com” Web site, which provided updated apartment-rental listings that covered around two million units in the U.S. and some other countries, focusing mainly on big rental properties although “single-unit owners can also pay for listings on a week-by-week basis” (Annual Report, 1998, p.3 & Weber, 1997, p.6). Success Determination By the Convergence Strategy and the Value Circle Strategy, the real estate division could link online to off-line assets such as “call service centers, mortgage originators, relocation counselors and national network of affiliated brokers and agents” (Annual Report, 2000, p.19). Moreover, the real estate division also succeeded in the Cendant 6 cross-marketing by connecting "Phone In, Move In" telephone-based platform to "Log In, Move In" online platform (Annual Report, 2000, p.19). 4. Value Bubble Attracting In 1999, Cendant launched the “move.com” to expand its business opportunities although the “move.com” including apartment-locator “Rentnet.com” was acquired by Homestore.com Inc. in 2001 (Annual Report, 2000, p.19). In order to succeed in the online business, Cendant’s real estate franchisees needed to have “the capacity to upload listings and photos directly to Web sites, automate their office and agent management systems effectively, and send referrals to each other through the Internet” (Annual Report, 1998, p.3). Cendant took advantage of online and off-line advertising and public releases through its “Media Center” to attract existing and potential customers (Annual Report, 1998, p.3). Attract Technology Engaging In order to build loyalty to the customer on the Web site, it was designed to communicate their specific needs and wants. On the Web site, visitors could choose a region or city, and also specify how large an apartment they wanted and how much rent they were willing to pay through “shopping list” that enabled to track units that they were interested in, and also enabled to calculate a cost-of-living for comparing different cities Cendant 7 (Weber, 1997, p.6). The Web site also featured “360 View” that enabled to virtually view selected apartments although an extra piece of software was needed to download to make it work (Weber, 1997, p.6). Engage Technology IFusion's ArrIve software was used to “alert people to listings that meet their specific criteria,” and subscribers also could enjoy “3-D virtual walk-through” (Weber, 1997, p.6). Retaining Cendant further deepened its relationship with the customer by encouraging repeat visits. The content of the Web site was frequently updated. When negative experiences occurred, Cendant could cover them both online and off-line. Retain Technology Both online and off-line interactions are available, such as e-mail, phone, and Fax. Learning Cendant is gathering customer data from site registrations and subscriptions. Learn Technology Relating Cendant 8 Relate Technology 5. Discussion of Customerization Through Customerization, Cendant would be possible to develop its services together with customers. For instance, Cendant would be able to improve its mortgage services by learning the customer’s needs and wants. On the other hand, the customer also would have benefits by receiving customized mortgage services based on its preferences. 6. Questions to Ask • What was the technology used to transact smoothly online by the real estate division? • What were the two types of strategies used to move online? • What were the purposes of the two strategies? • What technology did develop the ability to experience the products? Cendant 9 References (n.d.). Retrieved Dec. 16, 2005, from http://www.cendant.com/media/trends_information/trends_information.cgi/Real+ Estate+Services/308. Cendant Annual Report 1998, 1999, 2000. (n.d.). Retrieved Dec. 16, 2005, from (n.d.). Retrieved Dec. 16, 2005, from http://www.cendant.com/media/trends_information/trends_information.cgi/Real+ Estate+Services/308. "Cendant Corporation" International Directory of Company Histories, Vol. 44. St. James Press, 2002. Reproduced in Business and Company Resource Center. Farmington Hills, Mich.:Gale Group. 2005. http://galenet.galegroup.com.prxy6.ursus.maine.edu/servlet/BCRC I2501306794. "Largest Real Estate Companies by Employees, 2004." Business Rankings, (annual), Dun & Bradstreet Inc., 2005, p. VI-187. Business Rankings Annual 2006. Thomson Gale, 2006. Reproduced in Business and Company Resource Center. Farmington Hills, Mich.: Gale Group, June 2002. http://galenet.gale.com/servlet/BCRC/ Article: I2501249396 Weber, T. E. (1997). Wall Street Journal. (Eastern edition). , B.6- . Retrieved Dec 16, 2005, from Proquest database.
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