The final section of the Capstone must review the challenge and recommend a strategy for addressing the challenge based on resear
The final section of the Capstone must review the challenge and recommend a strategy for addressing the challenge based on research. Along with the strategy, define the potential financial or budgetary impact the strategy might present, including the additional costs that may arise if the problem or issue is not resolved effectively. Describe the metrics that the organization might consider for measuring the outcomes of the strategy utilized to resolve the challenge.
The entire paper will consist of the sections written during Weeks 1, 2, 3, and 5. It should begin with an executive summary, which is an abbreviated capture of the entire paper and as such should touch upon all major points while engaging the reader. The paper should close with a proper conclusion summarizing the concepts discussed in the paper. Remember, the summary is not a reiteration of the assignment requirements but a focus on the concepts and strategies related to the defined organizational challenge.
- Your paper must be at a minimum of 10 pages in length (excluding the title and reference pages) and formatted according to APA style guidelines as outlined in the Writing Center. In addition, you must use at least five scholarly sources to support and defend theories, informational resources to define and describe the organization, and the course text for further support. Remember to incorporate information that you have learned from this course as well as your personal experience. Review feedback received on assignments submitted during Weeks 1, 2, and 3. All revisions, corrections, or recommendations must be included in the final paper.
The Capstone Paper
- Must be at least 10 double-spaced pages in length (not including title and references pages) and formatted according to APA Style (Links to an external site.) as outlined in the Writing Center’s APA Formatting for Microsoft Word (Links to an external site.) resource.
- Must include a separate title page with the following:
- Title of paper
- Student’s name
- Course name and number
- Instructor’s name
- Date submitted
- Must utilize academic voice. See the Academic Voice (Links to an external site.)resource for additional guidance.
- Must include an introduction and conclusion paragraph. Your introduction paragraph needs to end with a clear thesis statement that indicates the purpose of your paper. For assistance on writing Introductions & Conclusions (Links to an external site.)as well as Writing a Thesis Statement (Links to an external site.), refer to the Writing Center resources.
- Must use at least five scholarly, peer-reviewed credible sources in addition to the course text.
- The Scholarly, Peer-Reviewed, and Other Credible Sources (Links to an external site.) table offers additional guidance on appropriate source types. If you have questions about whether a specific source is appropriate for his assignment, please contact your instructor. Your instructor has the final say about the appropriateness of a specific source for a particular assignment.
- Must document any information used from sources in APA Style as outlined in the Writing Center’s APA: Citing Within Your Paper (Links to an external site.) guide.
- Must include a separate references page that is formatted according to APA Style as outlined in the Writing Center. See the APA: Formatting Your References List (Links to an external site.) resource in the Writing Center for specifications.
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Week1assignmentSimonPropertyGroup.edited.docx_safe.pdf
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Week2assignmentSimonPropertiesGroupRealEstateandRetail.edited.docx_safe.pdf
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Week3assignmentSWOTAnalysis-SimonPropertyGroup.edited.docx_safe.pdf
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Simon Property Group
Angel Bloodworth
Strategic Planning for Organizations MGT450
University of Arizona
14 March 2022
2
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,
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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
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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).
5
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.
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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.
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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).
,
1
Simon Properties Group – Real Estate and Retail
Angel Bloodworth
MGT450: Strategic Planning
University of Arizona
21 March 2022
2
Introduction
Financial stability is advantageous to a company in several ways. It helps improve the
company’s image, facilitates access to capital, and gives the company more influence in the
industrial and political circles. Financial stability has so many benefits that it is considered
one of the essential goals in business management. The success of any company is dependent
on the stability with which it manages its finances. One of the characteristics of a financially
sound company is the ability to boast about having a diverse variety of resources at its
disposal. This is essential for the smooth functioning of the business and its long-term success.
This, however, is not the case with Simon Property Group, as it continues to struggle
financially. As mentioned in the previous assignment, the company faces a financial crisis that
severely impacts its strategic objectives. Its financial woes have forced the directors to release
four of its malls that have accumulated mortgage debt amounting to $400 million. The
company's stock, which has a market capitalization of $34 billion, has dropped by 41% in the
last two years. One of the reasons this challenge is a problem for the company is that it
reduces its chances of accessing funds. No firm or investor wants to be associated with or
invest in an underperforming company (Dang, Gorton & Holmström, 2020). The fact that
Simon Property Group is going through a rough patch financially limits the company's ability
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to raise financing. While the company may access some funding because of its clean history of
profitability and its many assets, its capacity to obtain large sums of money may be
constrained.
The other reason this challenge is a problem for the company is its rising debts. Too
many debts are bad for any business since it inhibits the firm’s ability to generate surplus
cash. Furthermore, common investors, who are the last to be reimbursed when a company
goes bankrupt, may suffer from high debt levels. The fact that Simon Property Group is
contemplating selling some of its malls to pay off debts indicates that it is on the verge of
bankruptcy. Bad debts may harm a company in various ways, including limiting the amount
of cash available to operate the firm daily and jeopardizing its capacity to pay its creditors.
A huge financial crisis for Simon Property Group also means inconsistent cash flow.
Cash flow constancy should be a major goal for any firm in operation, be it big or small.
Paying employees, bills, and suppliers is difficult when you don't have enough cash.
Inconsistent cash flow is bad for Simon Property Group because it means that the
management will be forced to make late payments or take additional loans. Late payments
may also have a negative impact on a business's credit rating, making it more difficult for the
firm to get credit account privileges and loans in the future (Roberts, 2019). The other reason
why a financial crisis is a problem for Simon Property Group is because it means that the
company does not have enough capital to quench its investments and diversification needs.
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Simon Property Group is well-known for its investing culture as a global corporation;
nevertheless, this is difficult if the business is in debt and has no money available for
investment.
Conclusion
Every company's worst enemy is a financial crisis. External aspects such as disasters or
weakening economy or internal aspects such as poor cash-flow management may result in a
financial crisis. If financial issues are not addressed properly and on time, they may severely
harm the company. Even if the firm strives to avoid them, owing to the status of the market
and resource prices, the company may get into debt; nonetheless, if these financial challenges
develop, it is critical to understand how to manage them in the most efficient manner
possible.
References
Dang, T. V., Gorton, G., & Holmström, B. (2020). The information view of financial crises.
Annual Review of Financial Economics, 12, 39-65.
Roberts, R. (2019). Gambling with Other People's Money: How Perverse Incentives Caused the
Financial Crisis. Hoover Press.
,
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SWOT Analysis- Simon Property Group
Angel Bloodworth
MGT 450
University of Arizona
28 March 2022
2
A SWOT analysis is a framework for analyzing a company's competitive position in its
industry. It provides critical information on both internal and external factors that may
impact an organization's ability to succeed. The tool can help an organization improve
performance, identify new opportunities, maximize return on resources invested, and
mitigate various business and policy risks.
SWOT Analysis
Strengths
The word "strengths" refers to the beneficial internal activities, habits, and processes
inside a corporation. Those are the aspects that contribute to the success of the firm and the
success of its brand (Quezada et al., 2019). Strengths are important because they will provide
Simon Property Group with the right tools to solve the existing challenge (Financial crisis).
i. Reach and distribution. Simon Property Group is supported by a
comprehensive distribution network that guarantees its items are easily available
to many customers on time. SPG has risen to become one of the most recognizable
retail brands globally due to its innovation and one-of-a-kind merchandise (Lin et
al., 2017). This particular strength means that the company has a strong brand in
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the market that can help attract a huge amount of money to help the company
solve its financial crisis.
ii. Financial Position. Simon Property Group has a strong financial position, with
a history of steady profitability and profit reserves that can be used to support
future capital expenditures. Simon Property Group is well-positioned to meet its
long-term goals. Most of the company's income comes from the return on capital
expenditures made in the past on various initiatives. Furthermore, the company
has a large asset base, contributing to its ability to remain viable (Burayidi & Yoo,
2021). The fact that the SPG is in good financial standing shows that it has received
a consistent stream of positive returns over an extended period. In this case, the
firm can use a portion of its income to pay off debts that it has accrued over the last
two fiscal years. Furthermore, since the company has a large asset base, it may be
able to use these assets as collateral to get loans rapidly to resolve its financial
woes.
iii. Skilled labor force. A great amount of money has been invested in staff
training, resulting in many highly skilled and motivated employees at SPG. The
company's staff comprises people from a diverse range of geographical, ethnic,
cultural, and educational backgrounds (Watson, 2016). Using this authority, the
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company can ensure that skilled employees aid the firm in introducing new ideas
and ways of doing things, especially in solving the current financial problem.
Weaknesses
Weakness in an organization is a limitation, shortcoming, or defect that inhibits the
organization from achieving its objectives and achieving its goals. When a company's
weaknesses are present, it cannot achieve its full potential. Those are the areas where the firm
has to improve to remain competitive (JATMIKO et al., 2021). Identifying weaknesses will help
Simon Property Group identify areas of improvement in regard to the current problem it is
facing. Doing this will allow SPG to design measures to rectify and manage its weak points,
which will help the company prosper.
i. Research and Development. Although SPG spends more on research and
development than the industry average, it spends far less than a small number of
businesses that have earned a significant competitive advantage due to their
innovative ways.
ii. Market dependability. SPG is primarily dependent on the markets in the
United States, with sales in the country accounting for around 87 percent of total
revenues (Sutherland, 2018). Although it has extended its operations in Asia, it is
still predominantly dependent on the North American market. SPG's income and
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operational resources might be jeopardized if the American economy experiences
another downturn, which would be catastrophic for the company. SPG must
diversify into other markets to avoid probable failures in the case of a downturn in
the US economy.
iii. Low current ratio. The company's current ratio is lower than the industry
standard, meaning it could face challenges meeting its short-term financial
obligations. This might indicate that the company will have liquidity challenges in
the future.
Opportunities
Opportunity refers to any favorable circumstance that exists in the organization.
Opportunities are defined as external factors that have the potential to provide a firm with a
competitive advantage over its competitors. In this case, by identifying the opportunities,
Simon Property Group will be in a position to understand areas where it can capitalize to
solve its current problem.
i. E-commerce. The e-commerce industry has seen a new trend and a rise in sales.
As a result, many customers are opting to make purchases online rather than in
person. Simon Property Group may be able to create revenue by developing online
stores and selling their products through them.
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ii. Social Media. The number of individuals who use social media has increased
dramatically throughout the world. Facebook, Twitter, and Instagram are the three
social media platforms that have had the biggest increase in monthly active users
over the last five years (Toscani, Tosin & Zanella, 2018). Simon Property Group can
use social media platforms to promote its products, communicate with customers,
and solicit feedback.
iii. Technological advancements. Technology offers several benefits in a range
of different industries. Technology makes it easy for SPG to collect more accurate
information on customers and increase marketing campaigns' effectiveness.
Threats
Threat refers to a situation that has the potential to create significant financial harm.
Identifying threats is important for Simon Property Group because it will provide the
management with insights on possible threats and ways to counteract them. This will help
prevent further escalation of the current problem the organization is facing.
i. Increasing competitiveness. There has been an increase in competition
within the retail industry, resulting in less downward pressure on prices (Wahba,
2016). If Simon Property Group does not respond to the price hikes, it risks losing
market share.
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ii. Exchange rate. A corporation like Simon Property Group, which has
international sales but relies on local suppliers, is can significantly be affected by
fluctuations in the currency rate.
iii. Technology development. Consumers attracted to new technologies by a few
rivals within the industry pose a threat to Simon Property Group since customers
may leave for competitors, resulting in a reduction in Simon Property Group's
overall market share.
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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.
JATMIKO, B., Udin, U. D. I. N., RAHARTI, R., LARAS, T., & ARDHI, K. F. (2021). Strategies for
MSMEs to achieve sustainable competitive advantage: The SWOT analysis method. The
Journal of Asian Finance, Economics and Business, 8(3), 505-515.
Lin, D., Mehta, T., Suradja, T., Tai, J., Tsai, K., & Vinayagam, T. (2017). Simon Says
Consulting Group BA 324 Simon Property Group November 15, 2017.
Quezada, L. E., Reinao, E. A., Palominos, P. I., & Oddershede, A. M. (2019). Measuring
performance using SWOT analysis and balanced scorecard. Procedia Manufacturing,
39, 786-793.
Sutherland, S. (2018). The Simon/Tanger Outlet Mall Health Impact Assessment: Resulting in
Active Transportation through Community Connectivity. Chronicles of Health Impact
Assessment, 3(2), 4-14.
9
Toscani, G., Tosin, A., & Zanella, M. (2018). Opinion modeling on social media and marketing
aspects. Physical Review E, 98(2), 022315.
Wahba, P. (2016). SIMON PROPERTY GROUP. FORTUNE, 174(8), 148-155.
Watson, S. (2016). What is happening to commercial malls: Evaluating contradicting opinions.
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