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
Services
Hospitality
Services
Travel
Distribution
Services
Vehicle Services
Cendant 4
Real Estate Services Business Units
Real Estate Franchises
Real Estate Brokerage
CENTURY 21®
Coldwell Banker®
Coldwell Banker
Commercial®
ERA®
Southeby’s International
Realty®
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.