Toll Brothers, Inc. Case Study

Topics: Barriers to entry, Competitor analysis, Competition Pages: 7 (1817 words) Published: January 17, 2011
Toll Brothers, Inc.


A request has been made in regards to the strategic management effort of Toll Brothers, Inc. current and future financial position by senior management. The report has several components starting with a Memorandum Introduction followed by an EFE Matrix, IFE Matrix, SWOT Matrix, Porter’s Five Competitive Forces, and the conclusion. Toll Brothers is a construction company that was founded in 1967 originally designed and built luxury homes in the suburbs of Philadelphia, Delaware, and southern New Jersey. Financing was arranged for these luxury homes and luxury residential resort-style golf homes in communities throughout the country as well. In 1986, Toll Brothers became a publicly traded company and expansion followed soon afterwards. We also build urban low, mid and high rise communities primarily on land we develop and renovate. Today the company operates in 21 states across the U.S. and is headquartered at Pennsylvania (David, (2009), pp. 133-141). The target market groups include leading edge Baby Boomers, move-up, empty nesters, and active-adults, age-qualified and second home buyers. Also, we provide building and upgrading services directly and through joint ventures for existing rental apartment buildings and convert them into high-, mid- and low-rise luxury homes. We have established a market for our luxury homes in certain markets through community development initiatives that accommodate the wealthy with extra amenities like golf courses, country clubs associated with master planned communities in the U.S., and recreational centers.

EFE Matrix for Toll Brothers, Inc

Key External Factors
1. Diversity in Specialized Markets.073.21
2. New bank credit facility, 600 million cash available to take advantage of posing opportunities .073.21 3. Low interest-rates for home buyers.064.24
4. Open and build high, mid, and low-rise luxury communities that cater to individuals seeking access to urban areas and quick access via public transit into these areas.094.36 5. Leading edge Baby Boomers Market.053.15

6. “Empty-Nesters” Market.043.12
7. Open and build Active Adults Only Communities .063.18 8. Expansion of urban luxury communities driven by scenic location or favorite weather conditions such as Florida, Arizona, California, Nevada, New York, New Jersey, San Francisco Bay Area.094.36 Threats

9. Competition from large builders.071.07
10. Competition from small, private builders.081.08
11. Prolong housing downturn could jeopardize profitability and cash flows.092.18 12. Weakening of the Homebuilding Industry.051.05
13. High Volatility of Input Costs such as materials and expenses.052.10 14. Unstable housing market.071.07
15. Economic Depression and/or Uncertain.061.06
Total 1.00 2.44

IFE Matrix for Toll Brothers, Inc

Key Internal Factors
1. Competitive Advantage.093.27
2. Well-Manage and Diversified.123.36
3. Financially Sound where they delivered 20% annual growth in total revenues, net income, and earnings per share.093.27 4. Established, well known market leader for luxury homes.084.32 5. New bank credit facility, 600 million cash on hand to take advantage of opportunities that may arise.153.45 Weakness

1. Shrinking book Orders .071.07
2. High Overhead cost & expenses.092.18
3. Reduction in Profit level .051.05
4. Economic Depression.091.09
5. Increasing Debt Obligation.081.08
6. Increased Prices.091.09
Total 1.00 2.23

A SWOT Matrix for Toll Brothers, Inc.
1. Competitive Advantage1. Shrinking book Orders
2. Well-Manage and Diversified 2. High Overhead cost & expenses up
3. Financially Sound where they delivered 20% annual growth in total revenues,...
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