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Office Space, A Company’s Frontier Case Solution & Answer

Office Space, A Company’s Frontier Case Study Solution

Introduction

The Drechtal was founded in the year 1998 in Basel, Switzerland. In the city, there are 30 percent residents who have foreign nationality and came to Basel,to work in the two leading industries which were: the banking industry and the pharmaceutical industry. In addition to this, two from the top three pharmaceutical companies, Novartis and Roche are also located in the Basel. The common skilled labor in the city has been attracted by many other pharmaceutical companies, along with Drechtal, which is also a smaller pharmaceutical company in the pharmaceutical industry.(Craigfurfine, 2017).

After the invention and success of three drugsthat have been developed for the treatment of cardiovascular disease; Drechtal’s growth and profitability have been increased, which increased the demand of an additional space in the company, in order to have an efficient work team with sufficient space for the company’s betterment. For this purpose, Drechtal had increased the space for the workforce in the company by leasinga nearby building for having an additional space in the company.

Problem Statement

Markus Steuer: the Real Estate Director at Drechtal Pharmaceuticals, has to choose the position that his company needs to find with an immediate potential. Drechtal currently rents premises in 7 different structures, but the company expects the first anticancer drug Trianolin (approved by the Swiss Medical Association) to increase the demand for staff significantly. The growing demand for potential locations has allowed Steuer to consider whether the choice is perfect to continue renting the space or to buy his own home office. Since their existing lease will expire in the next 24 months, so its time to consider Drechtal’s alternative.

Alternatives

According to the information provided in the case; it has been identified that the company has three options to further acquire the premises for an increase in workforce, which are:

  1. Continue leasing as needed and renew their current leases.
  2. Move and consolidate the employees in leased space.
  3. Acquire their own corporate headquarters.

Alternate 1: Renewal of Current Leases

The alternate one is related with the renewal of current leases, which shows that the company will renew the current lease option, with an immediate increase of 5 percent in rent, and further 5 percent will increase after the completion of 5 year.

Alternate 2: New Lease Option

The alternate two is related with the shifting of current lease with new lease, in which the company will acquire the three new premises, which are: Bürogebäude A, Bürogebäude B and Laborgebäude A, which are based on the 40,000 Leased Area (sq. meters), 28,000 Leased Area (sq. meters) and 17,000 Leased Area (sq. meters), respectively.

Alternate 3: Buying the Own Premises

The alternate three is related with the acquisition of its own premises, in which the company will acquire the Hauptsitz facility with 100,000 Area (sq. meters) at the price of 100,000,000 dollars,from which 70 percent amount will be generated through loan requires the interest rate of 1.2 percent annually, 10 years of maturity, 20 years of amortization and monthly installments.

Advantages of Ownership

If the business wants to move to a new office, one of the main issues would be buying space and building an office, or renting an existing space. Of course, both have pros and cons, but it’s time to buy not rent. The company has several years of experience in commercial real estate construction. In the long run, the benefits of owning your own land often outweighs the disadvantages.

Be your own owner: Dealing with the owner can be painful. If the office would have any problems (plumbing, electrical, etc.), the owner should fix it. This can be stressful at times as not all owners handle the situations responsibly. If the company has its own area, they would be able to solve problems at their own pace, and if there would be any problems which they would be required to solve, they could be sure to fill them out as needed.

The company can customize its workspace:If it decides to build its own office;it can also control the look and feel of the space. The company needs to be able to create a truly unique workspace that should look exactly what it wants. Plus, the company could feel free to find out for how long it could stay in the place……….

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