Abstract
Background: The South African property sector contributes highly to creating jobs, skills development, poverty reduction and economic growth. Although South Africa dropped in the global competitiveness ranking, the property sector of South Africa remains very competitive. To survive in a competitive sector, firms around the world practice competitive intelligence (CI). Although the use of CI has been examined in other sectors in South Africa, no study on CI practice has been conducted in the property sector.
Objectives: The objective of this research was to establish the extent to which the property sector of South Africa practices CI.
Method: This research was quantitative in nature and a web-based questionnaire was used to collect data from estate agencies in the South African property sector.
Results: The results indicate that the South African property sector is very competitive and estate agencies practice CI to gain competitive advantage and make quality decisions. Moreover, the results reveal that the property sector practice CI legally and ethically. The results indicate that the majority of estate agencies are very small employing at most five employees and make at most 5 million Rands annual turnover.
Conclusion: The South African property sector ethically and legally practices CI to gain competitive advantage and to aid in making quality decisions.
Introduction
Competitive intelligence (CI) is a critical success factor for for-profit and non-profit, large and small, public and private firms (Pellissier & Nenzhelele 2013a). CI improves product or service quality, quality of decisions and quality of life (Du Toit & Sewdass 2014; Maune 2014). CI gives competitive advantage to firms that operate in a competitive business environment (Barnea 2014). The South African property sector is very competitive, and it continues to thrive despite being negatively affected by the recession (Estate Agency Affairs Board [EAAB] Annual Report 2013/2014). According to the Estate Agency Affairs Board (EAAB) Annual Report (2013/2014), the South African property sector contributes highly to job creation, wealth creation, skills development, poverty reduction and economic growth. It contributes R191.4 billion to the South African economy (EAAB, 2014). The South African property sector remains competitive in spite of South Africa having dropped in ranking on the Global Competitiveness Report (EAAB Annual Report 2013/2014; The Global Competitiveness Report 2014–2015). To survive in a competitive business sector, firms seek tools that offer competitive advantage and help in decision-making (Bartes 2014a). CI is widely accepted as offering competitive advantage and help in decision-making (Weiss & Naylor 2010). Though research about CI practice has been conducted in other sectors in South Africa, no such research has been conducted in the property sector. There is a cry to conduct research on CI practice in all sectors of South Africa (Sewdass 2012). The purpose of this research is to establish the practice of CI in the South African property sector.
Definition of competitive intelligence
Many definitions of CI exist in the literature (Weiss & Naylor 2010). Some scholars define CI as a product and some as a process (Brody 2008). Roitner (2008) concludes that CI is both a product and a process. Most of these definitions differ because of a change of words, the use of synonyms and emphasis (Brody 2008). CI practitioners are so busy that they do not have time to define CI (Fleisher & Wright 2009). The existence of so many definitions in the field of CI creates confusion among scholars and practitioners (Colakoglu 2011). Also, it makes CI to be a practice with unstable borders (Haddadi, Dousset & Berrada 2010). Because of a lack of agreement on the definition of CI, it has been confused with industrial espionage (Colakoglu 2011). However, CI is different from industrial espionage because CI is legal and ethical (Haliso & Aina 2012). Having realised the problem of endless definitions, Pellisier and Nenzhelele (2013a) analysed 50 CI definitions to establish commonality and differences in order to propose a comprehensive and universally acceptable definition. Pellissier and Nenzhelele (2013b) define CI as ’a process or practice that produces and disseminates actionable intelligence by planning, ethically and legally collecting, processing and analysing information from and about the internal and external or competitive environment in order to help decision-makers in decision-making and to provide a competitive advantage to the enterprise’. This definition will be used for the purpose of this study.
Competitive intelligence needs
Managers are paying more attention to CI and as a result there is a growing desire to fulfil CI needs (Barnea 2014; Lin & Yan-Zhang 2015). The end product of CI must satisfy the needs of decision-makers and trigger new intelligence needs (Bartes 2014a; Pinto 2014). In order to have clear, unambiguous and easy-to-understand intelligence needs, there needs to be two-way communication between the CI unit and the decision-makers (Du Toit & Sewdass 2014; Nasri & Zarai 2013). Formal meetings must be organised for CI practitioners and decision-makers to discuss the intelligence needs (Bartes 2014b). Decision-makers have plenty of intelligence needs and these needs must be differentiated from information needs, prioritised and translated into key intelligence topics (KITs) (Bartes 2014b; Degaut 2015; Nasri 2011; Prescott 1999). KITs are those decision-based, strategic issues about which managers must be regularly informed to set and implement strategy (Herring 1999). CI is aimed at answering KITs (Bartes 2014b). According to Herring (1999), only intelligence needs that are of highest priority and key to the success of the organisation must be fulfilled with the scarce resources (Prescott 1999). KITs are established and clearly defined during the planning phase of the CI process (Bulley, Baku & Allan 2014; Yassine 2014). KITs can come from different levels of management such as strategic, functional and tactical (McGonagle & Vella 2012). Quality CI depends on clearly defined and unambiguous KITs (Bartes 2014b; Nasri 2011).
According to Barnea (2014), KITs must cover world competition, tactical and strategic issues instead of just local competition and tactical issues. To gain competitive advantage from CI, KITs must be clearly defined (Barnea 2014). According to Herring (1999), there are three categories of KITs, namely strategic decisions and actions, topics requiring early warning and profiles, and characteristics and descriptions of the key players. Strategic decision and actions include the development of strategic plans and strategies. Early-warning topics include competitor initiatives, technological surprise and government actions. Descriptions of key players include competitors, customers, suppliers, regulators and potential partners.
Evolution of competitive intelligence
CI evolves from economics, marketing, military theory, information science and library and strategic management (Deng & Luo 2010; Juhari & Stephens 2006). Governments of countries rely on intelligence for the protection of their citizens (Deng & Luo 2010). Marketing departments of firms all over the world rely on intelligence for marketing, pricing and promotion of their products or services (Nasri & Zarai 2013). Libraries rely on intelligence for quality sources of information for scholars (Fleisher 2004). Strategists rely on intelligence to anticipate and prepare for future competition (Barrett 2010).
CI has been around for longer than the first time it was officially practised in business and recorded in the literature (Juhari & Stephens 2006). Since its inception, CI has been practised by public, private, for-profit, non-profit, large and small organisations. While CI is a relatively new business discipline, CI is evolving in complexity and importance to keep pace with rapid business development (Heppes & Du Toit 2009). Because of its benefits, more organisations are practising CI either formally or informally (Nenzhelele 2012).
Post-apartheid, South African firms have been exposed to global competition (Pellissier & Nenzhelele 2013b). To survive in the midst of global competition, South African firms are practising CI (Du Toit & Sewdass 2014). This is confirmed by Muller (2006) who points out that CI took root in South Africa in the mid-1990s and early-2000s. CI in South Africa emerged from the business sector (Heppes & Du Toit 2009). Although South African firms have been inward-looking, they are starting to realise the importance of CI from year to year (Adidam, Gajre & Kejriwal 2009). De Pelsmacker et al. (2005) point out that enterprises that formally practise CI are growing in numbers and that CI is especially strong in the banking sector, the information technology sector, the telecommunications sector and the electric supply sector. Although CI practice has been widely reported for large organisations, Nenzhelele (2012) establishes that smaller enterprises in South Africa are also practising CI. Although CI practice has been widely reported in South Africa for for-profit organisations, there is lack of report of CI practice on non-profit organisations (Sewdass & Du Toit 2014).
Competitive intelligence process
CI is a process or practice, which follows predetermined phases (Du Toit & Sewdass 2014). CI process has been portrayed as a circle to indicate that it is continuous and that the end product of one phase is the input of the next phase (Calof & Skinner 1998). There are influential factors that play a role during the CI process (Bartes 2014a). The CI process is made up of the following steps, which are depicted in Figure 1 (Pellissier & Nenzhelele 2013a).
Planning and direction
The intelligence requirements of the decision-makers are defined in this phase. The intelligence requirements are narrowed down into KITs. KITs are topics that are significant to the organisation’s decision-makers and give directions to CI operations. The KITs must be clear and easy to understand. The KITs must be converted into information requirements and the source of information be clearly outlined. The purpose for conducting CI is defined in this phase. The participants, resources required and recipients of the actionable CI are clearly identified in this phase.
Information collection
Quality information is collected during this phase. Information must be collected legally and ethically. The information collectors must comply with the CI code of ethics. Efforts must be exercised to collect information from public sources. Information collected must meet the KITs. Information can be collected from internal or external sources.
Information sorting, capturing and storing
Collected information must be sorted, captured and stored. Related information must be sorted and captured together. Information must be stored in files that are easily accessible by all permitted users. The information must be stored in secured storage media.
Information analysis
This is the most important phase of the CI process and can be challenging. Information analysis should be conducted by an experienced CI practitioner. That way the outcome of this phase will be quality, actionable intelligence. The CI practitioner must, during this phase, be in constant communication with the decision-makers to ensure that their intelligence requirements are met. Different analysis techniques should be considered and those that are relevant must be used to produce intelligence that meet the KITs.
Intelligence dissemination
Quality actionable CI is communicated to the decision-makers during this phase. Care must be given to ensure that safe and secure means of communication are used. CI must be communicated to the correct users of it, and on time, or else it is no longer intelligence. There are different methods of communicating CI. These methods must be considered and the best method is selected and used.
Decision-makers
Decision-makers are the users of actionable CI. They are the initiators of the CI process. Decision-makers are responsible for coming up with intelligence requirements. Decision-makers have an important influence over the CI process. They, therefore, should be consulted throughout the CI process in order to establish whether their intelligence needs have changed during the CI process. If the intelligence needs have changed, adjustments must be made and relevant information must be sourced to produce relevant intelligence.
Process and structure
The CI process is influenced by policies, procedures, code of ethics and structures within the organisation. The CI practitioners must ensure that they comply with policies, procedures and code of ethics while conducting CI. Failure by CI practitioners to comply may put the organisation in disrepute. It may also lead to legal consequences. Therefore, organisations that practise CI must include the CI code of ethics in their policies and code of ethics. A formal CI function and process will ensure that CI is of quality.
Organisational awareness and culture
A culture of CI awareness and competitiveness will ensure that CI is performed optimally. It will also lead to production of quality CI. Organisations must raise CI awareness with all employees. Employees who are aware of CI will not give information to competitors cheaply. Moreover, employees who are aware of CI will help in the CI process. Organisations must train and educate employees on CI and its benefits to the organisation. This will reduce the CI challenges and help in the smooth development of CI.
Feedback
This is an influential factor in the CI process. There should be continuous feedback throughout the CI process. CI practitioners must communicate with the decision-makers to ensure that relevant and actionable CI is produced. Constant feedback ensures timely adjustments to KIT. Constant feedback throughout the CI process will help to produce quality CI.
The property sector of South Africa
The property sector of South Africa is an economic enabler and allows upward economic mobility for future generations (EAAB Annual Report 2013/2014). It contributes to job creation, wealth creation, poverty reduction, skills development and quality of life. It is attractive for investors, facilitates inheritance, creates wealth and alleviates poverty (EAAB Annual Report 2012/2013). According to the EAAB Annual Report (2013/2014), the property sector fulfils the constitutional rights of South Africans. The property sector gives South Africans an opportunity to own a home. Moreover, property ownership enables access to capital, creates income streams and a sense of security.
However, since the 2008/2009 economic meltdown, the property sector has been striving to recover (EAAB Annual Report 2010/2011). Many estate agencies have been shut down because of lack of funds to sustain them. Many estate agencies owned by people from disadvantaged backgrounds struggle to survive under these economic conditions (EAAB Annual Report 2013/2014). The National Credit Act has contributed to the slow growth of the property sector due to strict measures to protect consumers from sinking into debt (EAAB Annual Report 2008/2009).
Despite the stringent economic conditions, principal and non-principal agents, firms and attorneys registered with the EAAB have increased leading to a very competitive property sector (EAAB Annual Report 2010/2011; EAAB Annual Report 2013/2014). To remain competitive, more and more property practitioners are listing property on the internet, making it easily accessible and viewable by consumers. There are many websites in South Africa dedicated to listing properties and reporting of property sector trends. Potential consumers login to these websites searching for properties to buy or to let. These websites also allow individuals to list their properties for sale or to let, making them accessible for buyers, lessees or estate agents.
The South African property sector is regulated and controlled by the EAAB (Estate Agency Affairs Act 112 of 1976). The EAAB was established in 1976 in terms of the Estate Agency Affairs Act 112 of 1976. Since 17 May 2012, the EAAB has been relocated from the Department of Trade and Industry to the Department of Human Settlement (EAAB Annual Report 2013/2014). The core mandate of the EAAB remains the following five key regulatory pillars, namely Registration, Education, Inspections and Investigation, Disciplinary and Claims and its industry supervisory role in terms of the Financial Intelligence Centre Act (EAAB Annual Report 2009/2010). According to the EAAB Annual Report 2013/2014, the EAAB regulates and controls activities of estate agents in the public interest. Moreover, the EAAB ensures that all estate agents that service the public are registered. The report indicates that each registered estate agency is issued with a fidelity fund certificate, which is renewable every year and serves as registration evidence. The fidelity fund certificate also confirms that the estate agency is legally entitled to carry out the activities of an estate agency. The EAAB is also mandated to train and educate estate agents. It does so by introducing improved education and training standards and the setting of practical experience requirements (EAAB Annual Report 2013/2014).
The EAAB has started an alliance with other organisations to fulfil its mandates and protect consumers from unscrupulous estate agencies (EAAB Annual Report 2013/2014). According to the EAAB Annual Report 2013/2014, the EAAB works together with the following organisations: Independent Regulatory Board for Auditors, South Africa Institute of Charted Accountants, National Consumer Commission, Financial Services Board, Banking Association of South Africa, Service Sector Education and Training Authority, Black Conveyancers Association and the Financial Intelligence Centre. The EAAB is also a member of the Association of Real Estate Licence Law Officials (ARELLO) and the international organisation of real estate regulators. As a result, the EAAB is able to contribute to the international real estate sector. Its membership to ARELLO makes the EAAB remain in the forefront of the international property sector. Therefore, the EAAB is aware of best practices and puts the South African property sector in a better position in the world property sector. This makes the South African property sector attractive, competitive, secure and safe for international investors (EAAB Annual Report 2013/2014).
According to the EAAB 2008/2009 Annual Report, estate agents perform the following activities or functions:
- selling, purchasing or publicly exhibiting for sale immovable property or any business undertaking or negotiating in connection therewith, or canvassing or undertaking or offering to canvass a seller or purchaser thereof; or
- letting or hiring, or publicly exhibiting for hire immovable property or any business undertaking, or negotiating in connection therewith or canvassing or undertaking or offering to canvass a lessee or lessor thereof; or
- collecting or receiving any monies payable on account of a lease of immovable property or any business undertaking; or
- collecting or receiving money payable by any person to or on behalf of a developer or a body corporate in terms of the Sectional Titles Act in respect of a unit or a proposed unit. Estate agents have to comply with the EAAB code of conduct for estate agents. Failure by estate agents to comply with this code of conduct for estate agents may lead to a fine, withdrawal of their fidelity fund certificate or prosecution.
Research methodology
The research was quantitative in nature, and a web-based questionnaire was used to collect data from the estate agencies. The questionnaire was validated by a group of academics knowledgeable in the field of CI. A 5-point Likert scale was used to establish the level of agreement to statements about competitiveness and CI awareness. The scales ranged from strongly disagree to strongly agree. Contact details of 3878 estate agencies were sourced from one of South Africa’s most popular property websites. Of these estate agencies, 350 were randomly sampled for the purpose of this research. The names of the estate agencies were arranged in a table in Microsoft Word, printed and cut into pieces, which were placed in a basket for a lottery draw. The contact details of the sampled estate agencies were then sourced from the original database. An e-mail was sent to the sampled estate agencies with the link to the web-based questionnaire. By completing the questionnaire, the property practitioners gave consent that their responses may be used for the purpose of the research. For every e-mail that sent back a delivery failure, a new estate agency was sampled to replace it. A total of 242 responses were received, yielding a response rate of 69.14%. Only 239 questionnaires completed were usable. Reminder e-mails were sent to sampled estate agencies in order to increase the response rate. Data were collected over a period of 1 month. The web-based questionnaire was exported to a spreadsheet for analysis. The internal data reliability was calculated to be 0.9129 (Cronbach’s Alpha).
Research results
Demographics
According to Neuman (2006), there are four forms of enterprises in South Africa, namely company, close corporation (CC), partnership and proprietorship. They are defined as follows:
- Proprietorship is an enterprise that has one owner, and there is no distinction between the personal estate of the owner and the business estate.
- Partnership is an enterprise formed when a minimum of two and a maximum of 20 people conclude an agreement to do business with a partnership.
- A CC is a separate legal entity and is regulated in terms of the South African Close Corporation Act 69 of 1994. The CC must be registered in term of this act in order to attain separate legal entity status. A CC must have at least one member and not more than 10 members.
- A company is an association of people incorporated in terms of the Companies Act 61 of 1973. A company can have share capital or can be incorporated not for gain, in which case it will not have share capital.
Firms that participated in this research were companies (42.86%), CCs (29.06%), sole proprietorships (23.65%) and partnerships (4.43%). Table 1 indicates the percentage response and frequency of forms of business.
| TABLE 1: Percentage response and frequency of forms of enterprise (N = 203). |
South Africa consists of nine provinces. The majority of the estate agencies operate their business in Gauteng (40.39%) and the Western Cape (28.57%). The other provinces were represented as follows: KwaZulu-Natal (8.87%), Free State (7.39%), Eastern Cape (3.45%), Mpumalanga (3.45%), Limpopo (2.96%), NorthWest (2.96%) and Northern Cape (1.97%). Table 2 indicates the percentage response and frequency of provinces.
| TABLE 2: Percentage response and frequency of provinces (N = 203). |
Their focus areas were property rentals, sales, management and development (68.47%), sales only (28.57%) and rentals (2.96%). Table 3 indicates the percentage response and frequency of business focus area.
| TABLE 3: Percentage response and frequency of business focus area (N = 203). |
The majority of estate agencies were very small with one to five employees (45.32%). The rest of the estate agencies had 6 to 10 employees (29.56%), 11 to 20 employees (15.27%), 21 to 50 employees (5.42%), 20 to 200 employees (2.96%) and 201 or more employees (1.48%). Table 4 indicates the percentage response and frequency of the number of employees.
| TABLE 4: Percentage response and frequency of number of employees (N = 203). |
Financially, the majority of the estate agencies (36.95%) were making a total annual turnover of R1m to R5m. However, 32.51% were making a total annual turnover of less than R1m. A reasonable percentage of estate agencies (12.32%) were making a total annual turnover of more than R64m. Other estate agencies were making R6m to R10m (9.36%), R21m to R30m (5.91%), R31m to R50m (1.48%) and R51m to R64m (1.48%). Table 5 indicates the percentage response and frequency of number of total annual turnover.
| TABLE 5: Percentage response and frequency of total annual turnover (N = 203). |
The majority of the estate agencies have been operating their business for 6 years or more (60.59%). The other estate agencies had been in operation for 3–5 years (25.12%), 1–3 years (10.34%) and less than 1 year (3.94%). Table 6 indicates the percentage response and frequency of number of years of business operation.
| TABLE 6: Percentage response and frequency of years of business operation (N = 203). |
The majority of the respondents were owners/managers of the estate agencies (82.18%). The other respondents were property practitioners (10.40%), sales/marketing managers (6.93%) and CI professionals (0.50%). Table 7 indicates the percentage response and frequency of number of positions held in the organisation.
| TABLE 7: Percentage response and frequency of positions held in the organisation (N = 202). |
Competition in the property sector
With regard to competition within the property sector of South Africa, the majority (50.63%) of estate agencies indicated that competition is too high in the property sector. Only 20.92% of the estate agencies disagreed that competition is too high in the property sector, while 28.45% neither agreed nor disagreed. Therefore, a mean value of 3.42 indicates that the majority of estate agencies agree that competition is too high in the property sector. A standard deviation of 1.07 indicates that there was a wide spread of responses to this variable. Table 8 indicates the frequency of responses of the level of competition in the property sector.
| TABLE 8: Frequency of responses to level of competition in the property sector (N = 239). |
Competitive intelligence practice
Regarding CI practice within estate agencies, the majority (86.19%) indicated that they practise CI in their firm. Only 5.44% of the estate agencies indicated that they do not practise CI within their firm and the remaining 8.37% neither agreed nor disagreed. A mean value of 4.10 indicates that the majority of the estate agencies agreed that they practise CI within their firm. A standard deviation of 0.80 indicates that there was a smaller spread of responses to the CI practice variable. When asked how long they have been practising CI, the majority (47.16%) of the estate agencies indicated that they have been practising CI for 6 or more years. The rest had been practising CI for 3–5 years (27.95%), 1–2 years (13.10%) and less than a year (11.79%). Table 9 indicates the frequency of responses of CI practice in the property sector.
| TABLE 9: Frequency of responses to competitive intelligence practice in the property sector (N = 239). |
Purpose of competitive intelligence
With regard to the purpose for practising CI, the majority (75.32%) of the estate agencies indicated that they practise CI to aid with decision-making. Only 10.46% of the estate agencies indicated that they do not practise CI for decision-making and the remaining 14.23% neither agreed nor disagreed. Therefore, a mean value of 3.83 indicates that the majority of estate agencies agree that they practise CI to aid with decision-making. A standard deviation of 0.97 indicates that there was a smaller spread of responses in the practice of CI to aid with the decision-making variable.
Regarding the practising of CI to gain competitive advantage, the majority (71.97%) of estate agencies indicated that they practice CI to gain competitive advantage over their competitors. Only 7.12% of the estate agencies disagreed that they practise CI to gain competitive advantage over their rivals and the remaining 20.92% neither agreed nor disagreed. Therefore, a mean value of 3.88 indicates that the majority of estate agencies agree that CI provide them with competitive advantage over their rivals. A standard deviation of 0.89 indicates that there was less spread of responses to this variable. Table 10 indicates the frequency of responses of purpose of CI practice in the property sector.
| TABLE 10: Frequency of responses to purpose of competitive intelligence practice in the property sector (N = 239). |
Competitive intelligence ethics
With regard to ethicality and legality of CI, the majority (84.94%) of the estate agencies indicated that they practise CI legally and ethically. Only 2.93% of the estate agencies disagreed that they practise CI legally and ethically while 12.13% neither agreed nor disagreed. Therefore, a mean value of 4.26 indicates that the majority of estate agencies agree that they practise CI legally and ethically. A standard deviation of 0.80 indicates that there was less spread of responses to this variable. Table 11 indicates the frequency of responses of legal and ethical CI practice in the property sector.
| TABLE 11: Frequency of responses to legal and ethical competitive intelligence practice in the property sector (N = 239). |
Competitive intelligence activities
Concerning CI activities, the majority (68.62%) of the estate agencies indicated that they collect information about their competitors and analyse it. The remaining 14.22% disagreed that they collect information about their competitor and analyse it, and 17.15% neither agreed nor disagreed. Therefore, a mean value of 3.73 indicates that the majority of the estate agencies agreed that they collect information about their competitors and analyse it. A standard deviation of 0.98 indicates that there was less spread of responses to this variable.
The majority (86.61%) of the estate agencies indicated that they were collecting information about pricing of real estate and related services of competitors. Only 3.77% of estate agencies disagreed that they collected information about pricing by competitors and 9.62% neither agreed nor disagreed. Therefore, a mean value of 4.16 indicates that the majority of the estate agencies agreed that they collect information about the pricing of real estate and related services by competitors. A standard deviation of 0.80 indicates that there was a smaller spread of responses to this variable.
The majority (69.04) of estate agencies indicated that they know who their competitors’ customers are. Only 11.72% of the estate agencies disagreed that they know their competitors’ customers and the remaining 19.25% neither agreed nor disagreed. Therefore, a mean value of 3.83 indicates that the majority of estate agencies agree that they know their competitors’ customers. A standard deviation of 1.04 indicates that there was a wide spread of responses to this variable.
Regarding the competitors’ strengths and weaknesses, the majority (69.04%) of the estate agencies indicated that they collect information about the competitors’ strengths and weaknesses. Only 7.12% of the estate agencies disagreed that they collect information about their competitors’ strengths and weaknesses and the remaining 23.85% neither agreed nor disagreed. Therefore, a mean value of 3.81 indicates that the majority of estate agencies agree that they collect information about the strengths and weaknesses of their competitors. A standard deviation of 0.85 indicates that there was less spread of responses to this variable.
Concerning competitors’ suppliers, the majority (43.51%) of the estate agencies indicated that they knew the suppliers of their competitors. A large number of estate agencies (34.31%) neither agreed nor disagreed and the remaining 22.18% disagreed that they knew their competitors’ suppliers. Therefore, a mean value of 3.28 indicates that the majority of the estate agencies agreed that they knew their competitors’ suppliers. A standard deviation of 1.00 indicates that there was a wide spread of responses to this variable.
Regarding processing and storing collected information for CI, the majority (52.30%) of the estate agencies indicated that they process and store information collected for CI. Only 21.76% of the estate agencies disagreed that they process and store collected information for CI, while 25.94% neither agreed nor disagreed. Therefore, a mean value of 3.42 indicates that the majority of estate agencies agree that they process and store information collected for CI. A standard deviation of 1.10 indicates that there was a wide spread of responses to this variable. Table 12 indicates the frequency of responses of CI practice activities in the property sector.
| TABLE 12: Frequency of responses to competitive intelligence practice activities in the property sector (N = 239). |
Collected and stored information is analysed to produce actionable CI. Different analysis techniques are used by estate agencies. The majority of the estate agencies use teamwork and brainstorming, SWOT analysis and valuation techniques. Table 13 indicates the percentage response and frequency of CI practice analytical tools in the property sector.
| TABLE 13: Percentage response and frequency of competitive intelligence practice analytical tools in the property sector (N = 219). |
Actionable CI must be disseminated to decision-makers. There are different methods used to disseminate actionable CI. The majority of estate agencies use face-to-face, e-mails, presentation and written reports to disseminate actionable intelligence. Table 14 indicates the percentage response and frequency of CI practice dissemination tools in the property sector.
| TABLE 14: Percentage response and frequency of competitive intelligence practice dissemination tools in the property sector (N = 219). |
Management support for competitive intelligence
Regarding the managers’ support for CI practice, the majority (84.10%) of estate agencies indicated that their managers support CI practice. Only 3.35% of the estate agencies indicated that their managers do not support CI practice within their firms and the remaining 12.55% neither agreed nor disagreed. Therefore, a mean value of 4.06 indicates that the majority of estate agencies agree that their managers support CI practice. A standard deviation of 0.73 indicates that there was a smaller spread of responses to this variable. Table 15 indicates the frequency of response of management support of CI practice in the property sector.
| TABLE 15: Frequency of response to management support of competitive intelligence practice in the property sector (N = 239). |
Outsourcing of competitive intelligence
Regarding the outsourcing of CI, the majority (77.82%) of estate agencies indicated that they do not hire people or other businesses to practise CI on their behalf. Only 10.04% of the estate agencies agreed that they hire people or other organisations to practise CI on their behalf, while 12.13% neither agreed nor disagreed. Therefore, a mean value of 2.03 indicates that the majority of estate agencies disagree that they hire people or other businesses to collect information on their behalf. A standard deviation of 0.96 indicates that there was a smaller spread of responses to this variable. Table 16 indicates the frequency of response of CI outsourcing in the property sector.
| TABLE 16: Frequency of response to competitive intelligence outsourcing in the property sector (N = 239). |
Competitive intelligence performance measurement
Regarding performance measurement of CI, the majority (34.73%) of estate agencies indicated that they measure the impact of CI on profit. The remaining 33.89% of the estate agencies indicated that they do not measure the impact of CI on profit while 31.38% neither agreed nor disagreed. Therefore, a mean value of 3.01 indicates that the majority of estate agencies agree that they measure the impact of CI on profit. A standard deviation of 1.07 indicates that there was a wide spread of responses to this variable. Table 17 indicates the frequency of response of the impact of CI performance measurement on profit in the property sector.
| TABLE 17: Frequency of response to the impact of competitive intelligence performance measurement on profit in the property sector (N = 239). |
Location of competitive intelligence
Competitive intelligence is placed in the following locations with the estate agency firms: marketing department (41.67%), knowledge management (27.78%), strategy management department (25.93%), and independent department (4.63%). Table 18 indicates the frequency of response of the location of CI in firms in the property sector.
| TABLE 18: Frequency of response to the location of competitive intelligence in firms in the property sector (N = 216). |
Discussion
Despite South Africa dropping in ranking in the Global Competitiveness Report, the property sector of South Africa remains competitive. This is evident in the majority of estate agencies agreeing that competition is too high in the property sector of South Africa. When competition is high, firms tend to seek tools that help them gain a competitive advantage over their rivals. It is not a surprise that the majority of the estate agencies agreed that they practise CI in their firms. Moreover, the majority of these estate agencies have been practising for 6 years or more. Therefore, they are experienced in the practice of CI. A larger number of the estate agencies indicated that they practise CI in order to gain competitive advantage. They also practise CI in order to aid decision-making. The majority of the estate agencies locate their CI in the marketing department. Perhaps this is because of the fact that the majority of the estate agencies are small and cannot afford to have a standalone CI department.
While there are ethical issues in the practice of CI, the majority of estate agencies indicated that they practise CI ethically and legally. That means that they do not buy information from employees of other estate agencies or reconstruct papers found in the bins of their competitors because the property sector of South Africa is guided by law and a code of conduct. It might be because of the education and training programmes offered by the EAAB. It could also be because of the consistent inspection by EAAB, punishment of unethical behaviour, whistle-blowing within the property sector or the ethics hotline.
In the process of practising CI, the majority of the estate agencies collect information about their competitors. Such information includes the pricing of real estate. That means that they know how much different properties cost to sell, to let or develop in different locations. The majority of the estate agencies agreed that they interact with the customers of their competitors. These interactions may help in getting useful information to improve their real estate services. Moreover, the majority of the estate agencies indicated that they collect information about the strengths and weaknesses of their competitors. Information about the weaknesses and strengths of the competitors help in strategic planning.
The majority of the estate agencies indicated that they know who their competitors’ suppliers are. This ensures that they get the same or better deal from the same suppliers. They, therefore, will not be spending more than what their competitors are spending for the same supplies. This ensures that resources are saved and invested in strategic areas of business. The majority of the estate agencies collect information from customers, internet and extranet, newspapers and business associates. The customers of estate agencies include buyers, sellers, owners and lessees. All these customers have needs that must be satisfied by estate agencies. It is no surprise that customers are the main source of information for CI. Collected information is then processed and stored for analyses.
The majority of estate agencies agreed that they analyse the information they collected to produce actionable CI. Estate agencies have realised that the analysis phase is the critical success factor of CI and that without the analysis phase, CI does not exist. The majority of estate agencies use teamwork and brainstorming, SWOT analysis and valuation techniques to analyse the collected information. These analysis techniques are widely used in other business sectors. The actionable CI is then disseminated to decision-makers in different levels of the firm. Actionable CI helps in making quality decisions. The majority of estate agencies use face-to-face meeting, e-mails and presentations to disseminate actionable CI.
Although the majority of estate agencies are small and have a low total annual turnover, they have been in operation for many years and have experience in how to survive in a competitive property sector because estate agencies managers support CI practice. Moreover, most estate agencies are managed by owners/managers who are supportive of CI practice. The majority of estate agencies practise CI in-house instead of outsourcing it. Perhaps this is because they are very small and lack the resources to appoint external contractors. It might be that estate agencies do not trust external firms or individuals. It might be that estate agencies want to ensure ethicality and legality in the practice of CI.
Most of the estate agencies have vested interest in the impact of CI on profit. As a result they measure the performance and impact of CI on profit. This helps them decide whether they should continue to invest in CI. Estate agencies are for-profit organisations and, therefore, invest in projects that contribute to profit. Considering that they have been practising CI for many years maybe they have found it to contribute positively towards profit.
Conclusion
Competition is very high in the South African property sector. To survive in this competitive sector, the majority of the estate agencies are practising CI. Regardless of the wide reporting of ethical concerns in CI practice, estate agencies practise CI ethically and legally. They respect the law and code of ethics in practising CI. They are, therefore, able to differentiate between CI and industrial espionage. Estate agencies in South Africa collect information about their competitors such as weaknesses and strength, pricing of real estate, suppliers of competitors and competitors’ customers. Customers are their main source of information for CI. Collected information is stored in internal and external hard drives for further analysis. Considering that the analysis phase is the critical success factor of CI, estate agencies analyse collected information to produce actionable CI. Teamwork and brainstorming, SWOT analysis and valuation techniques are widely used by the estate agencies to analyse collected information. Estate agencies disseminate actionable intelligence through face-to-face meetings, e-mails and presentation. Like firms in other sectors, the majority of estate agencies do not outsource CI practice but prefer to do it in-house. Because estate agencies are for-profit firms, they measure the performance of CI and its contribution to profit. Estate agencies continue to see the value of CI and they have been practising CI to a greater extent for over 6 years.
To remain competitive in a highly competitive property sector, estate agencies in South Africa should continue practising CI. Estate agencies should continue to practise CI ethically and legally as this ensures that CI is respected as a profession. The EAAB and other educational institutions should offer educational programmes in CI. Because they are the main source of information for CI, estate agencies should build good relationships with their customers. Estate agencies should continuously measure the performance of CI to determine its contribution to profit.
Future research should be conducted to determine why estate agencies locate the CI in the marketing/sales department. Furthermore, research must be conducted to determine factors that influence estate agencies to practise CI ethically and legally. Research must be conducted to determine why estate agencies do not outsource CI practice. Further research must be conducted to determine how estate agencies measure the performance of CI. Further research must be conducted to determine tools, techniques and software used by firms in the property sector to practice CI.
Acknowledgements
This work is based on the research supported by the National Research Foundation. The authors also acknowledge the University of South Africa (South Africa) for the funding and support without which this research would not have been possible.
Competing interests
The authors declare that they have no financial or personal relationships which may have inappropriately influenced them in writing this article.
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