PROBLEM SUMMARY

BACKGROUND

Redfin was founded with the idea that technology should be used to make all the transactions of real estate less costly, improved and quicker.However, it took a long time in realizing this notion. In 2005, Glenn Kelman took the command of Redfin. He perceived that company had to change itself before accomplishing its goal of redefining the real estate industry.Because of determination, Redfin was able to serve its customers in 80 markets all over the U.S., where it had employed around 763 full-time agents, and had observed annual growth of more than 40% in 2016.Still, it had only covered 0.5% of the total U.S. market, and possessed 2% share in its strongest market.Apparently, it seemed that there were high chances for the business to flourish.However, Redfin’s website was being used by many people; however,they were unacquainted ofthe brokerage services of Redfin. The rivalry started to rise. Opendoor, who bought properties directly from the sellers, was the most significant rival of Redfin.

PROBLEM

The start of the problem leads to the organization having a market share of 0.5% of the Overall U.S Market and Maximum 2% share in its strong markets, and traditional real estate brokers were hard to dissipate and provided high competition. Another Strategic Problem was the management of the capital fund brought in from IPO’s.Red Fin brought more capital into the business by introducing Initial Public Offering in the mid of 2017. Now the problem encountered after getting the funds by IPO was how these funds should be allocated appropriately. By utilizing the resources, Redfin was aiming to be a successful and durablefirm. Redfin wanted to take the following decisions wisely to be a competitive firm in the industry of real estate:

REDEFINE REAL ESTATE Harvard Case Solution & Analysis

• How much percentage of the funds should they allocate for advertising?
• Which channel should they use for advertising?
• Should they transform their policy of hiring full-time agents?
• As its rival Opendoor was expanding its business into numerous markets, therefore Redfin also wanted to decide that should it also buy home and purchase inventories? (Hong Lou, 2018)

REDEFINE REAL ESTATE Harvard Case Solution & Analysis n

Here, full-time agent means that the company has fixed the salary of all agents and they get bonus with every sale and purchase.Setting bonuses for agents is a strategy of the company so that agents will do their jobs efficiently and actively.

Another vital resource of any company is the funds needed to run the business. From the mid of the 2017, the main financial resource of the company is its shares. After its IPO, Redfin was able to capture a significant amount of money to increase its capital. Though it was not easy to make the investors contribute in this venture because there was so reluctance in the investors to believe that traditional brokers can be replaced by online brokers.

RESEARCH AND DEVELOPMENT

The main motto of the company was to provide the customers with ease in sale and purchase of properties without wasting their time and money. And for this reason, company has been striving to improve its customer experience..........

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