The mission of Ventas Inc is to be the leading real estate investment trust in the industry with a diversified portfolio of healthcare and research properties. The company has made steps towards achieving this mission. For example, currently, it has developed at least 1,200 healthcare and research facilities across USA, United Kingdom, and Canada. Ventas Inc has achieved success by using effective strategies to benefit from the healthcare real estate market which is worth PS1 trillion and highly fragmented. It provides services like investment-trust healthcare facilities, sale, rental, senior housing, and healthcare development, As such; it targets hospitals and medical offices in the USA, United Kingdom, Asia, and Canada.
Ventas Inc was founded in 1998 by Bruce Lunsford. At this time, it was Vencor's spin-off. Its main activities involved acquiring, developing, leasing, disposing, and managing real estate related to healthcare (Ventas Inc., 2016). One of the main reasons why the company is widely known in the USA and globally is that it successfully went through the 2007-2008 financial crisis. The top management insisted on creating cash reserves before the financial crisis. Consequently, Ventas Inc has remained successful despite the factors that affect the health real estate market like changes in the market demographics, interest rates, government policies, and economic performance.
The real estate industry continues to be one of the most significant sources of revenue. Recent statistics show that there are 210,000 companies' real estate management and brokerage companies (Ventas Inc., 2016). Meaning, the industry, provides ample opportunities for operators to get profit while improving the quality of life. Currently, the real estate industry is divided into commercial and residential (He and Huang, 2017). While there are real estate management and brokerage companies that engage in both, research evidence shows that the health care real estate market has become highly fragmented (Ventas Inc., 2016). Thus, companies that purchases, develop, lease and manage projects related to healthcare facilities continue to reap profits because an increase in the demand for senior houses, increase in the population of people above 65 years, and anticipation in the rise in the number of people above 85 years.
Ventas Inc faces stiff competition from Health Care REIT, Universal Health Realty Income, and HCP. Health Care REIT deals in senior housing, medical office buildings, post-acute care facilities, and memory care community. Universal Health Realty Income specializes in healthcare and human services facilities and child care centers. HCP develops and leases real estate to healthcare facilities. Apart from medical office buildings and hospitals, the company designs and leases pharmaceutical and biotech laboratories (He and Huang, 2017). Based on the range of services provided, it seems that HCP poses the most threat to Ventas Inc. It not only has the same operations as Ventas Inc but also engages in extra activities like developing pharmaceutical and biochemical laboratories. Also, HCP has fairly developed markets across the USA, United Kingdom, Asia, and Canada while Ventas largely depends on the USA market. Nevertheless, Ventus continues to outperform its competitors (He and Huang, 2017). For example, according to the company, it has consistently delivered a return of at least 23% to shareholders which its competitors cannot prove (Ventas Inc., 2016). Also, its market share in the USA and Canada continues to grow despite the consistent increase in the number of healthcare real estate companies in these regions.
Basic Firm Level Strategy
Ventas Inc uses both cost leadership and product differentiation as basic frim level strategies. The company uses differentiation through strong leadership and establishing trust. According to Ventas Inc, it has remained competitive in the healthcare real estate market by using an outstanding team of leaders who focus on continuing the long track record of its excellence (Ventas Inc., 2016). The company has a strong base of clients in the USA healthcare real estate market which it establishes through its active management. They promise clients quality through showing a track record of their success in the market. Also, it achieves differentiation through constant innovation. For example, the company uses environmentally friendly approaches like LEED which eliminate the health risks of its facilities to users (Ventas Inc., 2016). Ventas Inc uses cost leadership through purchasing, developing, managing, and leasing its facilities at a relatively low price compared to competitors. While the low-cost strategy is often associated with poor qualities, Ventas Inc uses it to attract client but still getting profit.
The analysis of background and healthcare real estate market industry information has shown that Ventas Inc is a quite successful company. Since its establishment, the company has maintained in providing quality and affordable healthcare and research facilities to hospitals and laboratories. It uses strategic business strategies which allowed it to successfully operated during the 2008 financial crisis which led many companies into bankruptcy. Also, the strategies will enable it to mitigate the effects of health care real estates environmental market factors like changes in the demographics of the target audience, economy, interest rates, and competition (Ventas Inc., 2016). The company faces stiff competition from other players in the market based on the range of products, the geographical market, and ears in the industry. Nevertheless, Ventus Inc. uses differentiation and cost leadership to stay competitive in the health care real estate market.
He, J. (Jack), & Jiekun Huang. (2017). Product Market Competition in a World of Cross-Ownership: Evidence from Institutional Blockholdings. Review of Financial Studies, 30(8), 2674-2718. https://doi.org/10.1093/rfs/hhx028
Ventas Inc. (2016, July 15). Delivering Our Promise: Excellence, Sustained. Retrieved from https://www.ventasreit.com/our-company
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