Smart Housing Småland

Smart Housing Småland bygger en internationellt ledande innovationsmiljö som, med användaren i centrum, skapar smart boende och hållbar byggd miljö med bas i glas och trä.

User-oriented business models in the wooden house construction industry – mapping and development

he Swedish wooden house industry is fascinating in many ways. Houses as a product are exciting in themselves. You only have to look at any of the house catalogues to realise that. The industry’s dependency on political decisions and economic fluctuations is another reason.

And yet another reason is the fact that the product is unique in at least two ways. Firstly, this is frequently the most expensive, most important purchase any consumer can ever make, so it is something purchased extremely rarely. Secondly, each house project is unique in some way; if not the house itself, then the combination of house, plot, land or some other factor. This leads to a great deal of uncertainty for the customer, and house construction companies have to deal with this.

The SHS pilot study “Business models in the wooden house construction industry – business development information” (Affärsmodeller i trähusbranschen – ett underlag för affärsutveckling) aimed to map and identify strategic challenges in the Swedish wooden house construction industry, focusing in particular on the relationship between wooden house construction companies and their customers.

The report (in Swedish) aims to help ensure that business models can be developed creatively, and also to identify areas requiring further development work. It focuses on “business to consumer” (B2C) operations and is restricted to 25 companies with at least five members of sales staff that sell prefabricated wooden houses.

Their business models (the way in which the company works to create profit or add value) have been mapped by means of interviews focusing on:

  • Who? (customer)
  • What? (value proposition)
  • How? (value chain)
  • Why? (profit mechanism)

Business models in the wooden house construction industry
Mapping business models in the wooden house construction industry is both easy and difficult.. Easy, because at least 19 of the 25 wooden house construction companies use the same business model at a general level. These are houses with a wooden structure that are prefabricated (to varying degrees) in a factory and sold via a sales organisation to private individuals in Sweden. And difficult, because the general model includes a fairly large number of different variants.

Four variants – Willa Nordic, Älvsbyhus, Myresjöhus and Fiskarhedenvillan – were identified within the general B2C business model, and these are described in greater detail.

Strategic challenges with the business model
The report discusses strategic challenges related to the present business model, in sections entitled Sales organisation, Customers of the future, The brand and Future offering.

As regards the current sales organisation, there is analysis and discussion of the vast array of “local offices”, how work is distributed between head office and local offices and the distribution of men and women within the sales organisations. 541 agents/members of sales staff were identified, of whom 76 (14%) were female. Numbers of women varied between 0 and 30% in the companies surveyed.

The section on trends highlights an example from the automotive industry where the importance of face-to-face encounters with sales staff is declining as additional and better information becomes available online. The new Volvo Polestar model, the big new thing is not the car, but the business model. The idea is to just have a small number of showrooms and only allow customers to buy the car online. Customers then “subscribe” to the car for two to three years. In the future, could it not be possible for many customers to lease their homes and rent the leased asset with no direct contact with an agent/member of sales staff?

Most people interviewed agreed that turnkey contracts are the concept of the future. They are also of the mindset that more specialised sales are effective; that is, that the sales staff do the selling and a construction manager manages the construction project itself.

Possible ways forward
Examples of areas appropriate for further development work are:

  • Strategic choices in the industry in order to develop the sales organisations
  • Strategic choices for the development of new offerings suitable for emerging customer segments
  • The wooden house construction industry’s strategic approach to the Internet of things

Project team: Jönköping International Business School (project owner), Träcentrum and Linnaeus University in partnership with Götenehus AB, Vimmerbyhus AB and Ny Collective AB

Project manager: Anders Melander, Jönköping International Business School, anders.melander@ju.se