TDS: Tenant App
STRATEGIC REPORT
Strategic Management (BFA603)
, 1
Executive summary
This report will focus on the analysis of TDS's current internal and external business environment,
taking into consideration the various strategic options available to the company. The specific choices
selected, and a clear plan of action will outline how TDS can accomplish the selected options that will be
mentioned.
Introduction
Prices in the UK property market have risen significantly in recent years, with the pandemic and
stamp duty exemptions leading to a more volatile market. The UK House Price Index from the Land
Registry - which is based on actual sales rather than asking prices - is the most trustworthy indicator of
movements in real estate prices (Maunder, 2022). The index is at 154.49 as of September 2022, with the
average house price in the UK being £294,559. The price of real estate has stagnated compared to the
previous month but has increased by 9.5% from the year prior (Registry, 2022). Despite generally
comparable numbers of people trying to buy a home, the number of people looking to rent a home has
increased significantly. The number of people asking about rental homes is up 23% taken at the same time
last year. In contrast, the number of smaller rental properties available, such as studios and one-bedroom
apartments, is down 4% from the same time last year, outpacing demand within the housing market
(Michael, 2022).
Tenancy Deposit Scheme, also referred to as the non-profit programme, provides insured and
custodial tenancy deposit security together with free, impartial dispute resolution if issues develop
regarding the allocation of the funds. Established in 2003, TDS protects 1.8 million deposits and 3 million
renters, accounting for 33% of the market. Each week, thousands of new tenants consider signing up with
TDS (TDS, 2022). Strategic drift is the propensity for plans to evolve gradually under the impact of historical
and cultural influences but fall behind an environment that is changing. Understanding the causes and
effects of strategic drift is crucial because it not only happens frequently but also because it explains why
organisations frequently appear to stagnate in terms of performance and strategy development. Strategic
drift also brings to light some key management issues, which in turn highlight some crucial lessons
(Whittington, 2019 p. 174).
The purpose of this research is to develop answers for two key strategic issues that TDS would like
to address. One being providing a strategy course that will allow TDS to interact with tenants in a
productive way going forward. This will be emphasized and with the use of sources outside the release of
the TLYFE app. Building on the company's current strategic position will also entail suggestions for ideas
that improve and modify the business model while maintaining current strengths, allowing the
organisation to demonstrate tenant participation and empowerment.
Secondly, launching the TLYFE app is another topic that will be prioritised as one of the strategic
objectives. Introducing new TLYFE features that will encourage app downloads and engagement. Along
with determining whether and how these features might generate money for TDS in the present or future.
These specific strategic activities that will be advised to make this achievable. It will also aid to identify the
market categories that will be used to target tenants and decide on the main communication strategy and
message. Examining the most effective ways for TDS to reach renters who are not already participating in
its programmes and listing the top 5 KPIs that TDS should use to gauge the performance of TLYFE app (TDS,
2022).
, 2
Part 1- Strategic Position
PESTLE Analysis (Aguilar, 1968)
The PESTLE analytical tool is important for companies like TDS because it helps them to examine
the external factors that face the organisation and, in the process, TDS can be able to think about the
potential impacts of these individual factors on the business (CIPD, 2021). Our consultancy team was
concerned about TDS’s current strategic position and choices considering the current climate and future of
the company is our priority. We as a group considered the competitive advantage for TDS and to recognise
its strategic position in an aggressive but dynamic industry, our consultancy group conducted a PESTLE
analysis for the company (Appendix A for the PESTLE Analysis).
PESTLE Summary of positioning
Changes in government policy and regulation have resulted in the collapse of the exchange rate,
which has increased mortgage rates and spending. As a result of Liz Truss's unplanned tax cuts, sterling fell
by 1.16 percent against the US dollar, to 1.11 (Munbodh, 2022). This has caused commodities such as oil
and gas as well as everyday products to increase in price, affecting the overall purchasing power of
consumers and causing UK lenders to reject mortgages for consumers, having a ripple effect on the
housing market and causing the private rental sector to exploit housing needs in the UK (Munbodh, 2022).
The effects of TDS's position in the market will have a negative impact on the company's operating
expenses. As a result, TDS may be forced to pass on additional costs to its customers, and the company's
revenues will decline. However, the market changes may have the opposite effect on TDS, as the company
may be able to expand its presence through its pricing strategies and gain access to funding from the
central government. TDS position in the market allows for them to adjust pricing with loss leader pricing
that could allow for TDS to gain a new customer market using this opportunity for first time tenants and
landlords to use the service at reduced cost that would both boost revenue as well as market share.
As previously stated, changes in taxation on UK consumers and investors will exacerbate the
housing crisis and increase the demand for affordable housing. 11% of landlords said they have had to pass
on the cost of tax increases to their tenants, and because of the buy-to-let mortgage tax changes, 16% of
landlords have sold or are considering selling a property (Conor Shilling, 2022). This would have significant
repercussions for TDS, as it would be required to repurpose all its operations within the UK to ensure the
sustainability of their services. Huge volumes of tenant-landlord disputes can bring TDS's operation to a
halt if they continue to grow at an exponential rate. Also, changes in taxes affect the supply of housing in
the UK which can lead to a rise in rent prices due to the demand created by landlords' lack of investment.
The latest financial recession, which has caused the rise in the cost of living and high inflation, has
decreased the number of first-time buyers entering the market. As previously mentioned, new homebuyer
enquiries dropped to their lowest level since the 2008 financial crisis in October (Marry, 2022). The UK's
weakening economy, coupled with increasing borrowing costs and persistently high inflation, is exerting
pressure on mortgage repayments (Gilchrist, 2022). When describing the effects of the macroenvironment
on a PESTLE analysis, CIPD (2021) stated that internal factors, such as annual inflation rates and fluctuating
economic growth rates, also influence the external environment of a company.
STRATEGIC REPORT
Strategic Management (BFA603)
, 1
Executive summary
This report will focus on the analysis of TDS's current internal and external business environment,
taking into consideration the various strategic options available to the company. The specific choices
selected, and a clear plan of action will outline how TDS can accomplish the selected options that will be
mentioned.
Introduction
Prices in the UK property market have risen significantly in recent years, with the pandemic and
stamp duty exemptions leading to a more volatile market. The UK House Price Index from the Land
Registry - which is based on actual sales rather than asking prices - is the most trustworthy indicator of
movements in real estate prices (Maunder, 2022). The index is at 154.49 as of September 2022, with the
average house price in the UK being £294,559. The price of real estate has stagnated compared to the
previous month but has increased by 9.5% from the year prior (Registry, 2022). Despite generally
comparable numbers of people trying to buy a home, the number of people looking to rent a home has
increased significantly. The number of people asking about rental homes is up 23% taken at the same time
last year. In contrast, the number of smaller rental properties available, such as studios and one-bedroom
apartments, is down 4% from the same time last year, outpacing demand within the housing market
(Michael, 2022).
Tenancy Deposit Scheme, also referred to as the non-profit programme, provides insured and
custodial tenancy deposit security together with free, impartial dispute resolution if issues develop
regarding the allocation of the funds. Established in 2003, TDS protects 1.8 million deposits and 3 million
renters, accounting for 33% of the market. Each week, thousands of new tenants consider signing up with
TDS (TDS, 2022). Strategic drift is the propensity for plans to evolve gradually under the impact of historical
and cultural influences but fall behind an environment that is changing. Understanding the causes and
effects of strategic drift is crucial because it not only happens frequently but also because it explains why
organisations frequently appear to stagnate in terms of performance and strategy development. Strategic
drift also brings to light some key management issues, which in turn highlight some crucial lessons
(Whittington, 2019 p. 174).
The purpose of this research is to develop answers for two key strategic issues that TDS would like
to address. One being providing a strategy course that will allow TDS to interact with tenants in a
productive way going forward. This will be emphasized and with the use of sources outside the release of
the TLYFE app. Building on the company's current strategic position will also entail suggestions for ideas
that improve and modify the business model while maintaining current strengths, allowing the
organisation to demonstrate tenant participation and empowerment.
Secondly, launching the TLYFE app is another topic that will be prioritised as one of the strategic
objectives. Introducing new TLYFE features that will encourage app downloads and engagement. Along
with determining whether and how these features might generate money for TDS in the present or future.
These specific strategic activities that will be advised to make this achievable. It will also aid to identify the
market categories that will be used to target tenants and decide on the main communication strategy and
message. Examining the most effective ways for TDS to reach renters who are not already participating in
its programmes and listing the top 5 KPIs that TDS should use to gauge the performance of TLYFE app (TDS,
2022).
, 2
Part 1- Strategic Position
PESTLE Analysis (Aguilar, 1968)
The PESTLE analytical tool is important for companies like TDS because it helps them to examine
the external factors that face the organisation and, in the process, TDS can be able to think about the
potential impacts of these individual factors on the business (CIPD, 2021). Our consultancy team was
concerned about TDS’s current strategic position and choices considering the current climate and future of
the company is our priority. We as a group considered the competitive advantage for TDS and to recognise
its strategic position in an aggressive but dynamic industry, our consultancy group conducted a PESTLE
analysis for the company (Appendix A for the PESTLE Analysis).
PESTLE Summary of positioning
Changes in government policy and regulation have resulted in the collapse of the exchange rate,
which has increased mortgage rates and spending. As a result of Liz Truss's unplanned tax cuts, sterling fell
by 1.16 percent against the US dollar, to 1.11 (Munbodh, 2022). This has caused commodities such as oil
and gas as well as everyday products to increase in price, affecting the overall purchasing power of
consumers and causing UK lenders to reject mortgages for consumers, having a ripple effect on the
housing market and causing the private rental sector to exploit housing needs in the UK (Munbodh, 2022).
The effects of TDS's position in the market will have a negative impact on the company's operating
expenses. As a result, TDS may be forced to pass on additional costs to its customers, and the company's
revenues will decline. However, the market changes may have the opposite effect on TDS, as the company
may be able to expand its presence through its pricing strategies and gain access to funding from the
central government. TDS position in the market allows for them to adjust pricing with loss leader pricing
that could allow for TDS to gain a new customer market using this opportunity for first time tenants and
landlords to use the service at reduced cost that would both boost revenue as well as market share.
As previously stated, changes in taxation on UK consumers and investors will exacerbate the
housing crisis and increase the demand for affordable housing. 11% of landlords said they have had to pass
on the cost of tax increases to their tenants, and because of the buy-to-let mortgage tax changes, 16% of
landlords have sold or are considering selling a property (Conor Shilling, 2022). This would have significant
repercussions for TDS, as it would be required to repurpose all its operations within the UK to ensure the
sustainability of their services. Huge volumes of tenant-landlord disputes can bring TDS's operation to a
halt if they continue to grow at an exponential rate. Also, changes in taxes affect the supply of housing in
the UK which can lead to a rise in rent prices due to the demand created by landlords' lack of investment.
The latest financial recession, which has caused the rise in the cost of living and high inflation, has
decreased the number of first-time buyers entering the market. As previously mentioned, new homebuyer
enquiries dropped to their lowest level since the 2008 financial crisis in October (Marry, 2022). The UK's
weakening economy, coupled with increasing borrowing costs and persistently high inflation, is exerting
pressure on mortgage repayments (Gilchrist, 2022). When describing the effects of the macroenvironment
on a PESTLE analysis, CIPD (2021) stated that internal factors, such as annual inflation rates and fluctuating
economic growth rates, also influence the external environment of a company.
