Huaman Resources Management PART B ESSAY

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In August 2002, when the Dow Jones Industrial Average dipped under 8000 from a high of almost 11,500, Ralph Dodd and Sam Hoppel, academics, friends and coauthors, were lamenting their ever shrinking retirement funds.  As Hoppel was fond of saying “America believes in education: the average professor earns more money in a year than a professional athlete earns in a whole week.” 

 

After a long discussion, they decided that they needed to take direct control of their investments and not be prisoners to the rise and fall of the stock market.  Dodd had done enough preliminary research on the real estate market in their area and convinced Hoppel that there was money to be made becoming property owners and renting starter homes (3 bedroom, 2 baths) to individuals with poor credit who could not afford a home but who had excellent rental track records.  Dodd and Hoppel formed D & H Management and found six families in three months who were happy to rent and eventually purchase homes in the $175k price range.  The deal was so attractive that they even had a waiting list of new tenants.  The six homes though gobbled up their initial investment and required additional capital. 

 

The New Firm – DHR Construction, LLC

 

Their construction company started off as just a small capital raising venture.  Hoppel and Dodd would finish off the basements of their rental homes, get the homes reappraised, and then re-mortgage the properties pulling out an additional $10,000 - $20,000 per home.  These funds could then be used as down payments for future rental homes.

 

In chatting about this matter with some of their renters, Dodd and Hoppel were approached by one of them to perform all of the non-licensed work (excluding electrical, plumbing, HVAC, etc…).  Dodd explained to the renters (Alan and Wilma Bronson) that they would have to form their own company and act as any other subcontractor.  After completing a few basements, Alan and Wilma enjoyed working on these basements so much that they approached Dodd and Hoppel about figuring out a way that Dodd and Hoppel could keep them occupied all year round.   In essence, Alan would quit his job and work as a subcontractor for David and Hoppel.  This was not possible though since there was not enough work to keep Alan and Wilma busy.  Yet a few days later the situation dramatically changed. 

 

One of Dodd’ students, David Russ, who was designing their basements, said that he thought that Dodd and Hoppel could cut out the middle man in terms of the rental business if they built their own homes.  Dodd thought that Russ was crazy at the time but they talked after class and Russ said that he would be happy to act as the general contractor and that he knew all of the subcontractors who were needed in order to construct new homes.  Alan and Wilma would do all of the interior work, and Alan could hire some part-time workers to help himself out.  Dodd and Hoppel could then build the rest of their homes under a different company name, sell it to themselves for a small profit, and then make a profit renting the homes. 

 

In around nine months the preliminary profits derived from their construction operation led Dodd and Hoppel to build homes not only to be purchased by D & H Management but also for public consumption.  In May, 2003 DHR Construction broke ground on their first home to be sold to the public.

 

On November of 2003 Dodd and Hoppel bought out David Russ’s interests in DHR Construction due to differences in management and business philosophies.  Dodd was left to act as contractor while Hoppel handled D & H Management.  By January 2004 they had completed three homes at St. Andrews.  Alan quickly took over the role of foreman/contractor when DHR shifted their

building site to another location, the Florence Development, which had a much more up-scale look.  DHR was no longer building starter homes; they shifted into the midsize (4 bedroom, $300k) market where they could make a higher profit margin.  By April of 2004 DHR had built three homes in Florence, had plans to build five more in that area, and were looking at other developments for future growth and expansion. 

 

Branching Out – Patio Homes

 

In June of 2004 Dodd located a brand new development about 10 miles east of where they currently were building, in an area called Snowy Mountains.  Snowy Mountains was a unique project for the area since the developers had built lakes, a golf course, and a club house (including a three star restaurant) and had very specific designs for community development.  The housing currently in the development (phase one) ran the gamut of homes, from four bedroom patio homes (that started around $450k) to multimillion dollar estates on the lake. 

 

DHR Patio Homes was formed in August of 2004 by Dodd and Hoppel (run under the corporate label of DHR Construction) who decided to build the lower end patio homes; these homes would yield them their highest profit margins to date.  Using the same management and work crew as DHR, Dodd acted as the architect and head of operations for construction while Alan acted as foreman and continued his own subcontracting work.  Hoppel remained in charge of the rental operation but served as an advisor to Dodd on an “as needed” basis.

 

Essay Directions:

You should write a 1-2 page essay that answers the following questions.  Please organize your essay that must be in standard essay format with both an introduction and conclusion.  Your essay must address the following questions:

  1. Describe Dodd and Hoppel’ strategic planning process – what seems to be the driving force for their planning?
  2. What was Dodd and Hoppel’ original strategy for managing their retirement funds?  How did that strategy change?
  3. What type of strategy did Dodd and Hoppel first use in their business? How did that strategy change with the change in their business?
  4. What HRM issues might Dodd and Hoppel have to address given their changing business strategy?


PART B ESSAY  RUBRIC:

 

  • Definitions/identification of appropriate HRM concepts:  
  • Thoroughness of discussion, application of the concepts and use of facts, reasonable, logical conclusions:  
  • Grammar/spelling/following test directions/proper essay format and organization/outline.
  • Please do use APA to reference your answers

 

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