Subject area: Competitive Strategy, Corporate Level Strategy, Growth Strategy, Sustainability & Development
Region: Quebec, Canada
Industry: Real Estate
Company: GM Développement, Inc.
Decision Maker: Jean Campeau, CEO and co-founder of GM Développement
Dilemma: A Fork in the Road Ahead
It was that wintry day in real estate mogul Stephen Ross’ office that Jean realized he and Genevieve faced a strategic business problem. After hearing about Ross’ success story in growing his world-renowned real estate corporation, a newly envious Jean was left questioning how GM Développement could emulate this success. Now, almost 30 years into its existence, GM Développement is facing a critical expansion dilemma. Although the company has found a recipe for success by remaining in Québec, Jean is convinced that expansion to other markets is the next milestone for the company to achieve incremental growth. Like its direct competitors, GM Développement has until now focused almost all of its efforts in the Québec market alone.
One exception was when Jean and Genevieve acquired, renovated, and sold a residential complex in Miami as part of a small scale, one-off project in 1998. Even though the learning experience was minimal, it was enough to convince Jean that investing and developing outside of Québec was indeed feasible. After all, having already expanded their product offering to include all types of real estate—residential, commercial, and industrial—in prime neighborhoods of Québec, Jean felt geographical expansion was next on the horizon. Genevieve, not feeling as enthusiastic about the potential changes, is much more averse to taking such an enormous risk.
The company’s recent growth figures only serve to strengthen Jean’s point. GM Développement’s year-over-year revenues surged by 53% and 36% in 2010 and 2011, respectively, but have averaged a mere 6% since (Exhibit 10). These trends coincide with the downsizing of the company’s employees since 2010. Even when employee count peaked again at 102 employees in 2014, revenue shortfalls forced the company to downsize once more. These figures were one of several signals to Jean that growth in Québec had become stagnant, and that, as employee count had in recent years, revenues might take a turn for the worse if the company did not act sooner or later.
Category: Competitive Strategy, Corporate Level Strategy, Growth Strategy, Sustainability & Development