The competitive forces of M. Porter in the Spanish real estate

The competitive forces of M. Porter in the Spanish real estate

The competitive forces of M. Porter

Since Michael Porter (1979) relocated the competitive forces that affect a company in its daily performance, and gave them a new exposure in its famous work, it is classic to refer to the "five competitive forces of Porter when studying" how attractive is this industry in relation to investment opportunities and profitability . "(Wikipedia)

The fortune, fame and extension of his essay should not make us forget that what Porter does is to place among the: a) Suppliers (Owners in our case) and b) Buyers three other forces that affect the performance of the company. These are:

  • c) The power (rivalry, opposition, collaboration, struggle ...) of competing companies that are already in the market.
  • d) Power ( influence, challenge, confrontation, emulation) of the new competitors that can go to the market segment in which we are, with innovative systems, improved variants of existing ones, new products and services ...). And finally:
  • e) The threat of new substitute products of existing ones.

Porter's model enjoys an extraordinary reputation despite the fact that it has noted for some time that the model lacks pieces, for example:

  • f) The classic criticism of the model points to the absence of what it calls government (The power of regulation of all kinds, of the Powers of the State, and of the supranational powers -we will have to be added now-). We will not have to forget in this part dedicated to the Power, to the pressure groups (lobbies, big corporations ... and other much less transparent societies) that pressure the Government -local, national, transnational-, in many ways and and in our sector, another source of power, which affects us directly: the Judicial Power, because with its sentences it is correcting, almost always by force, our course. And of the Political Power as a catalyst or oppressor of the economic progress of the country, I do not even speak to it.
  • g) The absence in its model, of the Civil Society - that not only acts through its role of buyers and sellers-, you can not forget. Note what has happened to the indignados of the Plaza del Sol in Madrid a few years ago The phenomenon Podemos and his cronies have been organized and have arisen.

Also, about all of them-fortunately- we have a guest of honor: the scientific-technical thinking that can alter any industry at any time with its continuous innovations.

So an improved scheme on Porter's classic in which those are taken into account new competitive forces, we present in the following graphic:

The competitive forces of M. Porter in the Spanish real estate

Modified scheme by Michael Porter

And the environment should not be forgotten either internal of the company, because also in your heart, you can find answers more appropriate than those of the competition.

In the previous postcard (1) I have spoken of one of those forces: of the Power of the current Competitors. And as you will remember, the issue had come out when considering how things had changed when crossing this Crisis.And it is also true that the process, not of purchase but sale, that have established some of them, is streamlining the buying and selling process and the clients of the banks' floors are adapting to them.

2 Buyers begin, in these months, to be able to obtain loans for their purchases but the conditions of acquisition have hardened considerably, and should have a greater amount of savings than before the crisis. This has reduced the number of "free" buyers -with possible- in the market. However, these have taken on a special role, as the number of cash sales increases.

3 A part of the buyers has changed their minds: if before it was considered the best investment one could make in his life he was buying a house -or a place for his business-, and that rent was throwing money, today, this does not stay the same. The threatening perception that what happened once happened again, has settled in the population. The threat of losing the property if you can not pay the mortgage for reasons so alien to the mortgaged will of losing your job in a new economic crisis, is there and has also come to stay. And so the rental market is flourishing.

4 The assortment of goods for sale has increased, as much of the property has changed ownership, from its former owners, who retained the property for sale -because they lived in it, of course- to others who, overwhelmed by the number of their "adjudicated", dream of parting with them ..., although, not at any price.

5 They also move in a economic environment "more sour" that limit their investment expectations.

These and other ideas about our buyers or investors, should be taken into account in the current performance of our real estate, along with the drift of the rest of competitive forces. We are no longer where we were and the end of the Crisis has not returned us to Paradise. We will never again enjoy Eden where we were before or enjoy more of its rivers and its fruits. We have to start over! But watch out! the snake of extreme and wild capitalism, has come out reinforced and we continue having it with us.

I leave the comment of the rest of competitive influences for future postcards and I say goodbye until another occasion.

Follow with Health!

Miguel Villarroya Martín, May 27, 2016/Madrid. Spain/Pri.010/


(1) See: After the Crisis in the Real Estate Market Do we act the same? what did we do before? Or in, in an extended version: After the real estate crisis ... The change?

Source of the image of M. Porter: