§ 5.6 Summary of BM components from the design workshop and focus group studies
SESSION CONTRIBUTION
What type of products can be offered to young starters?
Design, customer services, Type of products / services
Value propositions, target cus- tomers, customer relationship
Design workshop, focus group with young starters How much are customers
willing to pay? What are the mechanisms to pay? What are their options to pay?
Payment mechanism, afford- able rate, when to pay, pay for use, how to pay
Cost structure, revenue streams, key resources
Focus group with young starters, industry key players, professionals
How does the business reach the customers? How long does it take to be delivered? How does it differ from current con- ventional housing?
Delivery process, quality assurance of the product, waiting time, lead time, supply chain
Key resources, revenue streams, partnership
Focus group with young start- ers, industry and government agencies
TABLE 5.12 Contribution of the empirical to the formulation of the new business model
Pertaining to the customization option, we found that the housing need among young starters is high and demanding. But we agree that some demands are unrealistic. Therefore, we suggest that the flexZhouse could provide a design customization option for young starters from the available options and selection supplied by the company. We concluded that the target group for the new BM should include involve many segments, namely single occupants (people who need a basic model to start with, people who have a pet), couples (whether or not married), couples with children, etc. We received feedback on ownership options. This could relate to some of the respondents in the financial part who suggested rewarding loyal customers.
Renting / leasing
Rent-to-own
Rent-to-buy
FIGURE 5.11 Suggestions for housing tenures for the flexZhouse
On the affordability aspect, we received many responses on how the payment mechanisms could work and how the current affordability issues can be solved. We posit the 30% of salary rule of thumb should be adhered to. The monthly commitment for the users should not be more than the given 30% median salary income. Although we agreed that the cost of the unit will depend on the location, we think the price of the rental should be at least 20% lower than average properties in the surrounding the area.
As regards the supply chain, the finding suggests that the delivery time for the units should not exceed 4 months. The quality of the unit should be the suppliers’ top priority. It is important that the partnership the company builds with suppliers should ensure this at an early stage. Several recommendations and improvements from current conventional construction should become the strategy for the new business model.
value propositions double unit single unit/ studio unit duplex unit target customers young starters/ single occupants short commitment person young family partnership sanitary fittings kitchen suppliers wardrobe & built-in services / utility marketing and manufacturing resources
logistics, installation, equipments
durable products, exciting design and long lifespan
cost structure customer service
establish relationship with the customers throughout the
tenureship e.g. free consultancy the freedom to change design with flexible payment
easy relocation with free moving cost all-inclusive package for hassle-free term of payment
focus group with young starters
focus group with industry
focus group with government agencies
design workshop revenue streams
recurring money from leasing product and service and economy of scale monthly fees according to the period for services provided and unit used
the continuity of the business depends on the innovation of the new products, design and attractive financial offers
In summary, we posit that private sectors/developers would likely reject the new concept (initially) merely because they do not like dealing with uncertainty, especially when the new BM is introduced. However, we received good feedback from the government agencies indicating the potential to solve the issues of affordability among young starters in Malaysia. At the beginning of this thesis, we proposed the new BM as a private initiative for the industry; however, after the empirical work we suggested that the new BM should be supported by the government and subsidized as part of the government’s programme for affordable housing. The new flexZhouse BM was also seen as having the potential to support the government’s effort, especially by PR1MA to increase the demands for affordable housing.
Hence, all the feedback was needed for the formulation of the final BM and to include in the business framework presented in the following chapter. In that chapter, we look closely at suitable and appropriate case examples that we found elsewhere in the world and that can support the flexZhouse. Our emphasis is on the technical knowledge and the technology required to operate this, and especially to support the key resources and partnership component of the BM. We were interested in finding best practices that had already established the circular economy as part of their BM. In the following chapters, we take a closer look at how all these examples could contribute to strengthening and supporting the flexZhouse BM.
§ 5.8.1
Creating meaning from the research
Next, we sought to understand and explore the young starters’ needs, aspirations and issues in relation to current housing policy, and issues related to housing provision. The underlying factor of the research was to understand ‘why’ and ‘how’ questions and to go deeper into questions such as ‘Why did they respond in this manner?’ We used the memo tools in the ATLAS.ti to create meanings out of the transcription script from the focus group studies. The meaning reveals the relationship between the feedback and the goals of the research. This relationship explains the connection that cannot be answered through the process of survey and other quantitative methodologies. The memo in ATLAS.ti helps researchers to create additional notes like a diary and spaces for reflection during the process of analysis. The meanings of the research were divided into three factors: 1) the understanding of housing needs among young starters, 2) the rejection by private developers and 3) the difficulties related to the authorities’ requirements. For each of the factors, several new theoretical insights emerged and helped the theory building for the thesis.
§ 5.8.1.1
Factor 1: The understanding of housing needs among young starters
The findings show that although young starters desperately want to find suitable housing, they lack sufficient experience in dealing with financial situations. In general, the respondents have a minimum understanding of how the mortgage system works, legal procedures, terms and conditions in the sales & purchase agreement (S&P), interest rates offered by banks and what constitutes the housing contract. Most of the respondents made an attempt to buy a property without realizing the consequences of having more debt in their lives. This further explains the alarming debts among young Malaysians (Cagamas Berhad, 2013; Omar et., al). The importance of the 30% ratio for the affordability rate particularly shows a weak understanding and, as a result, respondents have no idea about the importance of the ratio as a prerogative to purchase a house. Further, we found that most respondents had unrealistic demands cocnerning ‘ideal’ housing, the house location and the facilities that should come with the house. Respondents wanted housing specifications that were far beyond their means. This is similar to the finding by Bruce and Kelly (2013) about the unrealistic housing expectations among young Australians.Among other salient findings, the ownership option still plays an essential role among
young Malaysians, particularly the Bumiputera (‘sons of the nation’5)figure 5.15. The
necessity of ownership is no longer an option: it is considered mandatory. The choice for ownership caused by the insecurity of the Bumiputera against other races in the country further strengthens the concept of sense of belonging. Home ownership suggests a better rank in society and thus creates security for them and future generations.
The support for customization is high among young starters: it is part of Malaysian culture to have an extended family. Although most respondents agreed with the idea of customization, the female respondents had a tendency to be participative and to have more idea about their current and future needs. Married respondents tended to contribute more ideas for the design propositions compared to single respondents. This shows that married people or people with commitment tend to favour the idea of customization and extended family. We found there is an increasing trend among Malaysians to stay single and unmarried for so many reasons that are not relevant to the study.
5 In Malaysia, private developers are required to put aside 10–15% of every housing development for the Bumi- putera, who also get a 10–15% discount. Malaysia is therefore unique in terms of ‘cultural ownership’ and has created its own theory of ownership.