Toll Brothers - Toll Brothers' (1) A toll brother succeeds...

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Toll Brothers' (1) A toll brother succeeds because of its product leadership and customer value. The annual report mentions in number tells that tolls brothers focuses on luxury homes and communities and high quality construction. As of page 8 of the 10-K reports says ‘ We believe in our marketing strategy, which emphasizes our more expensive “ Estate” and “Executive” lines of homes, has enhanced our reputation as a builder-developer of high-quality upscale housing .’ Page 2 of 10-K report says ‘we are the only publicly traded national home builder to have won all three of the industry’s highest honors: America’s Best Builder (1996), the National Housing Quality Award (1995), and Builder of the Year (1988). ’ Toll Brothers seeks to realize manufacturing efficiencies for the benefit of its shareholders, but its customers choose Toll Brothers for its leadership position in the luxury home market. (2) Here are four risks faced by Toll Brothers with suggested control activities: - Downturns in the real estate market could negatively impact Toll Brothers’ sales. Control activities: Diversify geographic markets served so that a downturn in one region of the country will not disarm the company. - Large sums of money may be spent buying land that, geographically speaking, cannot support home construction. For example, soil conditions may be too unstable to support the weight of a home. Control activities: Paying engineers to certify that targeted properties can support home construction. - Raw material costs may increase thereby decrease profit margins. Control activities: Vertically integrate by operating manufacturing facilities (see page 12 of the 10-K for a discussion of Toll Brothers’ manufacturing facilities). Buying raw materials at wholesale prices cuts out a middleman in the value chain. -
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Toll Brothers - Toll Brothers' (1) A toll brother succeeds...

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