Description
In October 2008, the president of Millbrook Estate Homes Ltd. is trying to determine if his firm should take on a new development called Whistle Hill Estates. Millbrook began as a builder of modest homes on a large scale, but the Whistle Hill opportunity would involve developing high-end custom homes.The president’s decision will have a significant effect on Millbrook’s future strategy. Millbrook can stay within its comfort zone and continue building large numbers of entry-level or mid-level homes, purchasing supplies in bulk, and negotiating volume discounts with the trades, or the company can choose to move into the high-end custom home segment, in which it will have to manage more complex designs, source custom materials, and provide a greater level of customer service to clients. In the second option, Millbrook has the opportunity to earn higher profits per house built. If the president wants Millbrook to expand into the custom home segment, he needs to consider what changes will be necessary to position the Whistle Hill opportunity for success.
Learning Objective
This case introduces students to the real estate development industry and the challenges that builders face. It allows students to map out the many steps required to bring a development project to completion, and to assess the differences between developing tract versus semi-custom versus custom homes. This case, which is ideal for an 80-minute class, can be used as an introduction to operations strategy for executive, MBA, and undergraduate students.