During Week 1, you researched and identified a specific problem or challenge the organization is experiencing. Describe the chall

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Simon Property Group

Angel Bloodworth

Strategic Planning for Organizations MGT450

University of Arizona

14 March 2022

Achieving a high level of financial stability while operating a profitable company is one of the most challenging tasks a business can face. After all, any firm facing cash flow and budgetary challenges will eventually collapse if these issues are not handled as soon as possible. One organization that has been having financial issues recently is Simon Properties Group. The company's financial woes, which partly has been caused by Covid-19, have damaged the company's reputation, and the public is slowly losing trust in the company's capabilities. Additionally, the fear of bankruptcy has adversely affected the company's long-term creditworthiness. This paper necessitates an analysis of Simon Properties Group, including its leadership, potential competition, and a recent news item posing a challenge to its strategy.

Organization

Established in the United States, Simon Property Group is a real estate investment trust specializing in outlet malls, retail malls, and lifestyle complexes. The company was founded in 1982 and currently has its headquarters in Indianapolis, Indiana. The Simon Property Group was founded in Indianapolis by brothers Herbert and Melvin Simon, who started by developing strip malls in the city. The company has locations around Europe, North America, and Asia, where the firm serves thousands of people every day and earns millions of dollars in sales each year. The company's portfolio includes properties that have gained national and international attention – assets that have proven to be the preferred destination for retailers (Jie & Jianwei, 2021). Simon is also known for its strong financial position, a senior management team that has been in place for many years and is highly regarded, as well as its innovative mindset, which is reflected in the company's history.

The industry

The corporation operates in the real estate business. Real estate has a lengthy history in the United States. The federal government sold and gave the property to private individuals for their own use after the Revolutionary War when it was no longer under the control of England. As the nation grew westward, this practice continued, most notably with the passage of the Homestead Act in 1862, which authorized individual ownership of U.S. property in return for maintaining and developing the area for at least five years (Katzler, 2017). Through the Homestead Act, the United States government granted more than 300 million acres of public land to private landowners, laying the groundwork for the real estate industry, which is currently worth $203.1 billion.

Mission and Vision

The company’s mission is to become the top retail real estate developer, owner, and manager globally.

The company's vision statement is that it wants to be the unchallenged leader in the business.

Values and purpose

Integrity, innovation, and a commitment to excellence are all qualities that the business maintains and encourages. Whether it's corporate structure or shopping mall platforms, Simon brings a wealth of expertise and unique industry knowledge to the table. Employees' continuing professional improvement is facilitated by a combination of factors, including dedication, hands-on learning, and opportunities for further training and development.

Leadership

Simon Properties Group uses the hierarchical style of leadership. Power structures and Organizational roles are well defined, and people are allowed to develop within their niches since management assigns responsibility based on workers' specialized abilities. David Simon, a well-known American real estate developer, serves as the company's chief executive officer. Several other significant executives work for the firm, including Steven Broadwater (CAO), Timothy G. Earnest (EVP), and Chidi Achara (SVP).

Identified challenge

Although Simon Property Group is one of the most well-known and leading real estate developers in the United States and internationally, the firm has lately faced a financial crisis that has negatively affected its strategic goals. Due to this financial crisis, the business has been forced to abandon four underperforming retail malls with mortgage debt totaling more than $400 million. The company plans to utilize the net proceeds of the selling to settle outstanding liabilities under its $3.5 billion unsecured revolving credit facility and other corporate purposes. Simon's stock, which has a market valuation of $34 billion, has declined by 41% since January 2020 as a result of the Covid-19 epidemic. Simon Property Group's overall revenue by the end of 2020 was about $1,174 million, a decrease of 27 percent from the same quarter the previous year. Total operating income fell even more precipitously in 2021, from $705 million in the same quarter of 2020 to $403 million in 2021, a 42 percent drop (Burayidi & Yoo, 2021). The worldwide pandemic has taken a toll on Simon Property Group, and in the third quarter, funds from operations were down $1.09 per share owing to lower sales from the company's domestic and overseas activities. This has substantially influenced the company's capacity to meet its profitability-related strategic goals.

Conclusion

The current scenario is undoubtedly difficult for Simon Property Group, but it might also provide an excellent chance for long-term development and a high return on investment. Simon Property Group is unquestionably one of the market's better and stronger participants, and it may be able to profit from the suffering of other enterprises. To begin with, the newly completed partnership with TRG provides SPG with an 80 percent ownership stake, which represents a solid possibility to preserve the firm from bankruptcy or other major problems. Before the COVID-19 outbreak, the real estate market was already under stress, and the pandemic just escalated the situation. As a result, several firms are anticipated to file for bankruptcy and may be shut down. Simon Property Group may be able to take advantage of some excellent purchasing opportunities as a result of this. It might lead to the acquisition of other enterprises, but it could also lead to the acquisition of other assets (malls, property, or other assets). It might also lead to possibilities to revamp its malls with new tenants or other customer-centric products.

References

Burayidi, M. A., & Yoo, S. (2021). Shopping Malls: Predicting Who Lives, Who Dies, and Why?. Journal of Real Estate Literature, 29(1), 60-81.

Jie, G, & Jianwei, L. U. (2021). Research on Linear Properties of SIMON Class Nonlinear Function. 43(11), 3359-3366.

Katzler, S. (2017). Improving strategic decisions for real estate investors: Perspectives on allocation and management (Doctoral dissertation, KTH Royal Institute of Technology).

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