Company Report of Barratt Developments PLC Essay

Company Report of Barratt Developments PLC - Essay Example In the comparison of the company’s recent performance to that of its closest competitor, Taylor Wimpey Plc it is noted that thou it generates more revenue than this competitor it posted lower profits due to huge expenditure arising from a huge debt repayment. Under the third section of the report, the strategies of market penetration and development are presented as the reasoned strategies for the future economic success of the company. 1.0 Introduction The historical background of the modern housing sector in the United Kingdom indicate that initially the sector was dominated by the government and private companies, which constructed houses for their workers but there was very little participation of private specialized construction companies. However, this changed with the increased pressure to adopt the neo-liberalization economic practices that encouraged privatization of most public corporations and led to the emergence of specialized construction companies, which revolut ionized the housing sector and resulted in the development of unique, well-designed, and constructed houses and business premises (Lowe, 2011). This report focuses on the Barratt Development PLC, which is among the largest residential property development companies in the United Kingdom. It has been in operation since 1958 and is largely acclaimed with the development of the UK residential property sector (Lowe, 2011). This study will commence by looking into the economic environment in which the Barratt Development PLC operates. Secondly, it will critically appraise the company’s financial performance in the recent years whilst comparing it to its closest competitor. Lastly, the study will incorporate an economic model and provide related information as appropriate in order to devise reasoned strategies for the future economic success Barratt Development Plc. 2.0 Economic environment in which Barratt Developments PLC operates Among the crucial economic factors that can indic ate the health of the UK economic environment in which Barratt Developments PLC operates in include interest rates and the prevailing income levels (Myers, 2013). This discussion will also incorporate an analysis of the impact of government policies on the housing sector and their impact on the operations of Barratt Developments Plc. 2.1 Interest rates In the studies conducted by Myers (2013), he stated that the interest rate levels within a country largely determine the accessibility of credit and in this case the accessibility of mortgage. The rate of interest at which borrowers are going to repay back their mortgage largely determines the booms and busts on the UK’s house prices. If the rate of interest charged on mortgage finance is considerably high, first time homebuyers will be discouraged and this will lead to a bust in the housing prices due to the low demand. If the level of interest rate is perceived to be at an affordable rate then first time homebu