Competition, Growth Strategies and the Globalization of Services: Real Estate Advisory Services in Japan, Europe and the US

269 Pages·1998·2.02 MB·English

by  Terence LaPier

COMPETITION, GROWTH
STRATEGIES AND THE
GLOBALIZATION OF SERVICES
Competition, Growth Strategies and the Globalization of Services examines
the international growth and diversification of real estate advisory services
in the United States, the United Kingdom, Germany and Japan since 1960.
The book explains how successful firms develop competitive advantages in
the global marketplace.
An evaluation of forty prominent firms (ten from each country) provides a
comparative reference for a detailed analysis of the growth and
internationalization of four major real estate advisory service firms (one
from each country). The firms have responded in many ways to changes in
international real estate investment, and their fortunes have varied accordingly.
This raises a number of important questions:

• What is the best growth strategy?
(cid:127) What are the most effective market-entry strategies?
(cid:127) Why do some companies make a successful transition to the international
marketplace?
(cid:127) Why do others fail?
(cid:127) Which cultural differences affect international growth?
(cid:127) Do successful companies grow organically or by using joint ventures,
networks and strategic alliances?
(cid:127) What is the importance of innovation and diversification for competitive
advantage?

The analysis provides factual evidence demonstrating growth strategies that
enable a firm to become a successful real estate advisory service in today’s
global economy.
Dr Terrence LaPier is the Entrepreneur-in-Residence at the Entrepreneurial
Center at the Wharton School of the University of Pennsylvania. He leads a
global research and consulting effort with CEOs focusing on entrepreneur-
to-professional-management dilemmas.
ROUTLEDGE STUDIES IN
INTERNATIONAL BUSINESS AND THE
WORLD ECONOMY
1. STATES AND FIRMS
Multinational enterprises in institutional competition
Razeen Sally
2. MULTINATIONAL RESTRUCTURING, INTERNATIONALIZATION
AND SMALL ECONOMIES
The Swedish case
Thomas Andersson, Torbjörn Fredriksson and Roger Svensson
3. FOREIGN DIRECT INVESTMENT AND GOVERNMENTS
Catalysts for economic restructuring
Edited by John H.Dunning and Rajneesh Narula
4. MULTINATIONAL INVESTMENT AND ECONOMIC STRUCTURE
Globalization and competitiveness
Rajneesh Narula
5. ENTREPRENEURSHIP IN A GLOBAL CONTEXT
Edited by Sue Birley and Ian MacMillan
6. THE GLOBAL STRUCTURE OF FINANCIAL MARKETS
An overview
Edited by Dilip K.Ghosh and Edgar Ortiz
7. ALLIANCE CAPITALISM AND GLOBAL BUSINESS
John H.Dunning
8. MULTINATIONAL ENTERPRISES FROM THE NETHERLANDS
Edited by Roger van Hoesel and Rajneesh Narula
9. COMPETITION, GROWTH STRATEGIES AND THE
GLOBALIZATION OF SERVICES
Real estate advisory services in Japan, Europe and the United States
Terrence LaPier
COMPETITION, GROWTH
STRATEGIES AND THE
GLOBALIZATION OF
SERVICES
Real estate advisory services in Japan,
Europe and the United States
Terrence LaPier
London and New York
First published 1998
by Routledge
11 New Fetter Lane, London EC4P 4EE

This edition published in the Taylor & Francis e-Library, 2002.
Simultaneously published in the USA and Canada
by Routledge
29 West 35th Street, New York, NY 10001
© 1998 Terrence LaPier
All rights reserved. No part of this book may be reprinted or
reproduced or utilized in any form or by any electronic,
mechanical, or other means, now known or hereafter
invented, including photocopying and recording, or in any
information storage or retrieval system, without permission in
writing from the publishers.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging in Publication Data
LaPier, Terrence, 1954–
Competition, growth strategies and the globalization of services:
real estate advisory services in Japan, Europe and the United
States/Terrence LaPier.
p. cm.
Includes bibliographical references and index.
1. Real estate business—Japan. 2. Real estate business—Europe.
3. Real estate business—United States. I. Title.
HD913.L36 1998
333.33–dc21 97–45903
CIP
ISBN 0-203-44816-2 Master e-book ISBN
ISBN 0-203-75640-1 (Adobe eReader Format)
ISBN 0–415–16924–0 (Print Edition)
CONTENTS
List of illustrations vii
Foreword ix
Acknowledgments xiii
1 Introduction 1
2 Cross-border direct investment 11
3 The internationalization of real estate advisory services 33
4 Historical profile of real estate advisory service firms 74
5 Innovations in international real estate advisory services 103
6 Real estate advisory service firms from the focal countries: 135
four case studies
7 Conclusions 190
Appendix A Analytical framework 205
Appendix B A brief history of restrictions on international 218
investment by the focal countries
Appendix C Historical yields and rates of return on real estate 223
investment in the focal countries
Bibliography 227
Index 247
v

ILLUSTRATIONS

Figures
6.1 Globalization of real estate advisory services: growing inward-
outward direct investment 137
6.2 Strategic alliances and acquisitions by Cushman & Wakefield 144
6.3 Cushman & Wakefield management structure (1975) 147
6.4 Cushman & Wakefield management structure (1997) 148
6.5 Jones Lang Wootton management structure (1975) 156
6.6 Strategic alliances and acquisitions by Jones Lang Wootton 158
6.7 Jones Lang Wootton management structure (1997) 160
6.8 Strategic alliances and acquisitions by Müller 165
6.9 Müller management structure (1975) 168
6.10 Müller management structure (1997) 169
6.11 Orix management structure (1997) 173
6.12 Strategic alliances and acquisitions by Orix 176
Tables
2.1 Stock of outward direct investment in total and in real estate by the
focal countries (1950–present) 14
2.2 Stock of inward direct investment in total and in real estate in the
focal countries (1950–present) 16
2.3 Real estate as a share of total outward and inward direct investment
in the focal countries (1960–present) 18
3.1 Gross domestic product in Germany, Japan, United Kingdom and
United States (1960–96) 39
3.2 Total nonresidential fixed investment in Germany, Japan, United
Kingdom and United States (1960–95) 40
3.3 Long-term employment trends in real estate and related industries in
the focal countries (1965, 1970, 1975, 1980, 1985, 1990, 1995) 45
vii
ILLUSTRATIONS
4.1 Summary profile of ten leading real estate advisory service firms in
each of the focal countries 77
4.2 Size of firms before (1960) and after (1997) internationalization of real
estate advisory services 79
4.3 Client profile of fee revenues by category for real estate advisory
service firms (1960–97) 82
4.4 Service diversification of real estate advisory firms (1960–97) 83
4.5 Domestic and foreign personnel in ten leading real estate advisory
service firms in each of the focal countries (1960–97) 86
4.6 Average annual staff growth of real estate advisory service firmsin
the focal countries (1960–97) 89
4.7 Domestic vs foreign sources of fee revenue in ten leading real estate
advisory service firms in each of the focal countries (1960–97) 91
5.1 Innovations in real estate advisory services in the United States,
United Kingdom, Germany and Japan 109
6.1 Size of firms before and after implementation of international
strategy 136
6.2 Corporate profile of Cushman & Wakefield (1960–97) 141
6.3 Competitive scope, service diversification and geographic expansion
at Cushman & Wakefield (1960–97) 142
6.4 Sources of revenue for Cushman & Wakefield (1960–97) 143
6.5 Corporate profile of Jones Lang Wootton (1960–97) 154
6.6 Competitive scope, service diversification and geographic expansion
at Jones Lang Wootton (1960–97) 155
6.7 Sources of revenue for Jones Lang Wootton (1960–97) 157
6.8 Corporate profile of Müller International Immobilien GmbH
(1960–97) 163
6.9 Competitive scope, service diversification and geographic expansion
at Müller (1960–97) 164
6.10 Sources of revenue for Müller (1960–97) 165
6.11 Corporate profile of Orix Corporation (1960–97) 172
6.12 Sources of revenue for Orix (1960–97) 175
A.1 World stock of outward direct investment by the ten largestsource
countries in 1990 rank order (1960, 1973, 1980, 1990) 208
A.2 Stock of outward direct investment in real estate by the major source
countries in 1990 rank order (1966–90) 209
A.3 Foreign investment restrictions in main sectors in the focal countries
(1997) 221
A.4 Historical yields and rates of return on real estate investment in the
focal countries (1960–90) 225
viii
FOREWORD

Dr Ian MacMillan
Terrence LaPier’s book is based on a carefully assembled and painstakingly
detailed analysis of the globalization of real estate advisory service firms that
spans both decades and continents. Thus no serious real estate professional
who is concerned with international real estate business can afford to ignore
this monumental and unique undertaking.
The fundamental insight that is the foundation for the book is the
observation that, despite the globalization of this industry, real estate is
ultimately a localized industry requiring expert knowledge of local property
and investment markets, and that the firms’ ultimate success in each
competitive market depended on the combination of their local expertise,
reputation and professional relationships. The dilemma for firms engaged in
globalization is that the unit of real estate is illiquid and has unique properties
largely dependent on local economic and property market conditions. Thus
localization of the real estate advisory services was a necessary, but not
sufficient condition for global success—there arose a need for a multinational
organizational structure in response to the growth of international real estate
service needs, primarily driven by the demands of clients who were
multinational corporations making substantial cross-border direct investments
in real estate as their multinational expansion took on global characteristics.
Thus LaPier shows us how globalization of real estate advisory services
flowed from two major macro processes: first, from the development and
opening of formerly national real estate markets and second, the subsequent
pattern by which firm development marched to the cadence of cross border
direct investment. The opening of national markets was accompanied by, and
also pressured by, migration of real estate investments, investors and professional
advisors, which then drove an expanding demand for advisory service products.
Thus expanding rates of cross-border investment by and among global investors
in globalizing financial markets (led by investments from corporations, financial
institutions, securities and investment banks, pension and insurance funds)
ix