Image Audit Of Olav Thon Real Estates

Essay, Research Paper

Image Audit of Olav Thon Real Estates

THE IMAGE AUDIT

Corporate Communication 1998-99

? Describe your organization and do a mini-SWOT analysis of it.

Olav Thon Eiendomsselskap ASA was founded and given its present structure in

1982. The company is a part of the Olav Thon Group. It was introduced on the Oslo Stock Exchange in 1983, and the company has grown considerably since then. The Group is mainly involved in real estate and operations in the hotel and restaurant trade. The company`s main strategy is to invest in business properties which is centrally located, especially in the Oslo area. In the long term, the company aims to achieve the highest possible added value. This may be achieved through redevelopment and efficient operation of the properties. As of 01.01.98 the company`s property portfolio consists of about 350 000 sqm of rental space, and the aggregate (theoretical) rental value of this portfolio is approximately NOK 408 mill. As of 31.12.97, the company had 1, 743 shareholders. Mr. Olav Thon holds about 62,3% of the shares.

The semi-annual report as at 30 June 1998, shows that the Group`s rental and other opertaing income for the first six months of 1998 was NOK 211,1 compared with NOK 178 million in the first half of 1997. The percentage of shares held by Mr. Olav Thon, did not change. The profit for the second half of 1998 was anticipated to be in line with the results of the first half-year.

? MINI-SWOT ANALYSIS

? STRENGHTS:

? good maintenance and standard of the real estates

? Safe tenancy conditions solid and secure real-estate management

? Flexibility regarding the size and situation of the premises

? Well established service apparatus, and good personal service

? Attractive premises

? Long experience

? loyal customers

? niches: offices / general business premises, shopping centers and hotels

? situation of premises

? well built infrastructure (train, subway, bus, roads etc.) around the real-estates

? WEAKNESSES:

? Expensive, and rising rental prices

? static marked

? OPPORTUNITIES:

? private housing marked

? industrial areas

? continued buying up and expansion in Oslo, Norway and abroad covers two segments: those who want to establish in the nucleus, and those who want to establish in shopping centers

? positive development regarding shopping centers

? localization close to the junctions/infrastructure

? continued development of shopping centers and hotels

? THREATS:

? home offices

? the authorities restricts business

? strong competition

? taxes

? shortage of properties and buildings

? shopping centers enormous dynamic inside commodity trade

? Identify their most important stakeholder groups and explain their importance to the organization.

A stakeholder is those with a vested interest or stake in an organization, or in other words they are individuals who perceive themselves to have an interest in the actions of an organization. They may be customers, shareholders, employees, or just members of society. They generally express themselves through groups that share a common purpose such as environmental or consumer causes (Baskin. 1997: 160).

Several sociologists have described types of linkages that the public relations manager can use to identify an organization’ most important interpenetrating systems. Milton J. Esman listed four types of linkages that he believed to be critical for an organization to survive. The four kind of linkages are; enabling linkages, functional linkages, normative linkages and diffused linkages (Grunig, 1984: 140-142). We have chosen the groups within each of these linkages which we identify as the most important. We have also explained their importance to the organization.

Employees

The employees provide the organization with workforce, experience and knowledge, and they do the tasks which is important for the organization to succeed. This group is representing the organization externally, and because of this they become very important for the firm.

Community Residents

Diffused linkages are described as elements in society which cannot clearly be identified by membership in formal organizations+ (Grunig, 1984: 142). One of these linkages is community residents. How are they important to Olav Thon Eiendomsselskap ASA? First of all the company would not exist if there were no tenants. OTE is depending on placing their facilities at places where it is attractive to have stores, rooms for firms etc. Both aspects are depending on infrastructure like roads, bus and parking lots, to be looked at as attractive. Because consumers must find it easy to visit a shopping center, and owners of firms must think its easy to locate their firm.

Stockholders

A lot of companies has the word ASA in its name, and that means that everyone is allowed to buy stocks in this company. In Olav Thon Eiendomsselskap ASA most of the stocks are controlled buy the firm itself, as many as 62,3 %. And most of the other stockholders possess less than 5 %. This means that there are no extern stockholders with enough voices to cause trouble for Olav Thon and his associates at general assemblies, and annual meetings.

The fact that OTE has extern stockholders means that they have foreign capital, which gives them financial strength to buy real estate at the right time. But this also puts some pressure on the firm to not have to much fluctuations in the aksjekurs, and that the firm has a good ROI (return on investment) compared to the risk it is to invest in OTE. Another aspect concerning the stockholders is that they most certainly claim the need for information about the firms actions and for utbytte.

Competitors

Each industry and market in which a firm operates will contain its own unique underlying dynamic based upon what one`s competitors are doing to influence sales. For Olav Thon Eiendom it is important to have a thorough understanding of the firms competitors to be able to adjust to the market. Adjusting to the market, for example by price, standard, development and service, is crucial for Olav Thon Eiendom if they want to survive in the real estate business. By taking the competitors into consideration, and understanding their operations, it is easier for Olav Thon Eiendom to adjust to the market in which they operate, and to achieve a sustainable advantage over their competitors.

Olav Thon Eiendom`s main competitors are: KLP, Steen & Str*m, Follo Eiendom etc.

Consumers

OTE is as every other firm depending on their consumers. It is from them the firm gets their money. Almost every building OTE is renting out is to stores and other firms. By this we can say that the firm OTE is depending on that the norwegian business community is doing rather good, because if they don`t many firms will go bankrupt and OTE will loose their customers. Another aspect of importance concerning the consumers is that OTE is depending on offering the right facilities for the right consumers, and if they do not they might loose the consumers to other firms in the same branch.

? Pick a target stakeholder group other than customers. Using your team as a focus group, identify not more than 5 image aspects that this target group would find important. Based on these aspects, use the CIB 96 as a guide to create a mini-image survey.

? Profit/return.

We think that OK means it is important that OTE is a profitable company, because OTE most certainly is a major tax payer to OK. There is also another aspect of this case, and that is the dilemma between the amount of tax OTE pays in percent of their income and what people look at as reasonable prices for renting facilities. In the Oslo area Olav Thon Eiendom is the closest you get to a monopolist in the real estate business, and this has a negative effect for those who rent. We are not certain if the city of Oslo sees the expensive rents as negative or positive.

? The company as employer.

We think that this is an important image aspect because OTE is a large firm which employs a lot of people, and it is important that these people is satisfied with the actual work and the working-environment. If they are living in OK, and they are getting sick while working at OTE it is OK`s responsibility.

? Expectations regarding the company`s future.

We believe that OTE plays a big role in this branch an we think it is important for OK what OTE plans to do in the future, because this will affect OK in one or another way.

? Quality of products/services.

It is important to OK that OTE delivers good products/services since they controls a lot of the market their in and pays most certainly a great deal of tax. Another aspect is that we think it can be important for OK that delivers good products and services because it is important that customers etc. feels comfortable in their buildings.

? Active stance in providing information about company activities.

It is most certainly important for OK that OTE is good at providing them with good information about their activities.

Create a mini-image survey, and administer the survey to a number of respondents. Report and discuss your results

Instead of creating a mini-image survey and distribute this to a number of people, we chose to base our image-audit on expert interviews. Our target stakeholder group is OK, and it would be difficult to do a survey within this group. There is a limited number of people who are qualified to give an opinion or make a statement about Olav Thon Eiendomsselskap ASA, and there is also limited who many who wants to give their opinion about this company. Another aspect is that it is unprofessional to run around in the Oslo R dhus trying to find as many respondents as possible. We were lucky to get an interview with the two most qualified spokespersons regarding this image-audit. We interviewed Hallgrim Thon, which is the managing director of OTE, and also John Tore Norenberg, which is the leader of the City Development Committee.

Summary of the interview with John Tore Norenberg

Leader of the City Development Committee

? Oslo Community is a user of Olav Thon Eiendom`s (OTE) services and they are also a supplier of real estate for the firm.

? Oslo Community uses the company that gives them the best offers, and the main competitors to OTE is OBOS and Selvaag.

? Oslo Community needs to have OTE inside their area because they provide a workforce which pay taxes.

? OTE operates with moderate prices, and make deliveries in relation to costs. Oslo community looks upon OTE as serious, reasonable and level-headed, and they are not perceived as a firm which pushes the prices.

? Instead of active marketing activities OTE uses informal information, for example by informal meetings and announcements.

? OTE has some power, but not enough to control the real estate market.

? OTE is free to form their plans according to the real estate to a great extent, and to make several suggestions, as long as they operate within the law.

? Oslo Community provides stability and safety for OTE, although deliveries from the community may be looked upon as unreliable.

? Future in the real estate market:

Rental market for private housing: Increasing market, and the services will be very attracted in the future. Operations in already existing buildings is most usual, something that gives OTE an advantage, because they specialise in building in already existing buildings.

Rental market for offices: The market is stable, and there is a growth of small companies. Home-offices are increasing, something that might threaten OTE.

? Oslo Community believes that OTE provides good quality, that they are professional, solid, conform and well-considered. But they may also be a bit slow in relation to their competitors. They may have to come up with some innovations to be able to compete and they may also have to take some risks.

? Oslo community thinks that OTE takes care of old and already exiting architecture. OTE often keep the areas uniqueness and adapts to the environment in which they build.

? Describe the image you believe the organization is trying to transmit. How do they do this? Do you believe there is a gap between the stakeholders`perceived image of the organization and the organization`s image of itself?

Olav Thon Eiendomsselskap ASA is a relatively fast expanding company. According to the Annual Report, its main strategy is to invest in centrally located business properties, with primary emphasis on the Oslo area. The company holds a strong financial position, and is chiefly involved in the rental market for retail premises and office and educational premises.

It has not been any scandals in the company, and reliability and trustworthiness are main points in its strategy. They keep a low profile, and try to keep a low profile, and work without exposing themselves too much. They try to obtain credibiltity through being moderate.

The conclusion we can draw from the interview with John Tore Norenberg, is that the company is very successful in its strategy. OTE does not rely on a lot of advertising and other types of marketing, neither towards OK nor the other stakeholders. Instead the company send a couple of representatives to informal meetings with OK, and skor seg p good PR and also a good reputation among customers and the public in general.

It seems like OTE try to operate towards all stakeholders in the same manner. It invests in centrally located properties, and even though it probably does not emphasize to keep its operations and plans secret, they obtain exactly this to a quite high degree by keeping this low profile. If you ask the man on the street about OTE, most peopleknow what it is, and sees the company as reliable, financially strong and with a good reputation.The employees of OK is no exception.

According to Norenberg and Thon, there is only a very small gap between the image OTE and OK have of OTE.

? Using the results of your audit and based on your knowledge of communication, recommend an image-building strategy for your organization directed at your target stakeholder group. What tools should this organization use to position itself and to build its image? Describe the tools (marketing, sales, public relations, others). Tell how they can be used to build visibility and how effective they are at building credibility.

Visibility is the breath of the marketing company`s reputation (Harvard Business School ..). Still; even if OTE does not do a lot of marketing of their company, they still have great awareness among the parts; in our case Oslo Community, in the market. Oslo Community know about the company and what they are doing, and they can even control the company to some extent through legislation and resolutions. In that way we can say that the company has great visibility.

Credibility is the quality of the company`s reputation among those who know it (Harvard ..). Oslo Community has nothing negative to say about OTE, except from that they may be a bit slow in their decision-making process. This may lead to that Oslo Community may prefer some of the competitors instead of OTE; someone who makes the decisions a bit faster. In that way OTE might lose some of their credibility.

The visibility and credibility of OTE in relation to Oslo Community can be displayed in a matrix (Se vedlegg 2 ??), where we can see that that they combine high visibility with pretty high credibility, something that gives them an unparalleled reputation.

But although OTE scores high on both visibility and credibility, they can still make the company even more credible by for example .

FYLLSTOFF

? Bedriftens ansikt Bedriftsprofilering. Hvorfor og hvordan? Nicole H bert, 1989: Dreyers Forlag A/S

Side 41

Bedriftene har en profil, som sjelden er slik de *nsker. Forklaringen er hjerteskj rende. Mange bedrifter tviler p sin egen identitet. Bare f av dem vet hva de vil v re, eller enda verre: hva de i virkeligheten er.

.

Det er absolutt n*dvendig for en bedrift skille seg ut i en verden der konkurransen skjerpes, og det vinne markedsandeler i seg selv ikke er nok til sikre bedriften varig eksistens.

.

En posisjonering definerer bedriftens eksistensberettigelse ved f frem hva den har som ikke andre har. Den presiserer bedriftens n*yaktige plass i en *konomisk, .

Side 42

sosial og konkurransepreget sammenheng

Den bygger p en samling uttrykte eller uuttrykte verdier som bedriften forholder seg til. Dermed virker den samlende.

? Public Relations Techniques Todd Hunt, James E. Grunig, 1994 Holt, Rinehart and Winston, Inc.

Side 4 + 5

Why Organizations Need Public Relations

Organizations, like people, must communicate with others because they do not exist alone in the world. If people had no relationships with family, neighbors, friends, enemies, or coworkers, they would have no need to communicate with anyone but themselves. But they are not alone, and must use communication to coordinate their behavior with people who affect them and are affected by them.

Organizations also have relationships within their family of employees and with communities, governments, consumers, financiers, supporters, detractors, and other publics. Organizations need public relations, in other words, because they have relationships with publics. Organizations are successful when they achieve their missions and goals, and most organizations prefer to choose their own missions and set their own goals. Seldom can they do so alone, however. Publics also have a stake in organizations, and they therefore strive to affect the missions and goals of these organizations.

For example, employees want the organization to provide them with satisfying jobs. Environmentalists want the organization to preserve nature .Communities want clean air, less traffic, and donations to community projects. Organizations probably wouldn t choose these goals if they existed alone in their environment. ..Life for both people and organizations, therefore, is a constant process of negotiation and compromise. And communication is one of the most effective means we have to negotiate and compromise.

? Public Relations Strategies and Tactics Dennis L. Wilcox, Philip H. Ault, Warren K. Agee, 1995 HarperCollins College Publishers

Side 381

A business slogan says, Think globally, act locally. An important part of public affairs consists of community relations, particularly in those towns and cities where the company maintains an office, retail outlets, or a manufacturing facility.

Because a corporation relies heavily on local governments for construction permits, changes in zoning laws, and even tax concessions, a good working relationship with city hall and various community groups is important. A community relations program also helps in the recruitment of employees and gives the company an influential voice in community affairs.

? Public Relations The Profession and the Practice Otis Baskin, Craig Aronoff, Dan Lattimore, 1997 Times Mirror Higher Education Group, Inc.