Investing large sums of money can be stressful. You want to be sure that your investment is as safe as possible, especially if there is more than money at stake. Houston EB5 was founded by immigrants who understand your concerns. We care as much about your investment as you do, so we use proven business strategies to make your EB5 green card investment as stable as possible.
Vertical Integration Protects Your EB5 Green Card Investment
Vertical integration is one of the strategies we use to protect your investment. This strategy helps us manage costs by giving us better control of our supply chain and reducing the uncertainty of relying on other companies for supply and distribution.
What Is Vertical Integration?
Regardless of the industry, many companies are specialists. The company focuses on one product or service it provides to the next company downstream. This way, products get handed from company to company — each adding value — until the end product reaches consumers.
As an alternative, Houston EB5 adopted a vertically integrated business model. Houston EB5 consolidates the path from raw materials to end products by acquiring the suppliers and distributors in our supply chain. This gives Houston EB5 greater control and helps keep costs down.
Why Adopt a Vertically Integrated Model?
There are advantages to a distributed model. Specializing in a limited portion of the supply chain allows companies to begin operations with a smaller initial capital investment and a more focused workforce. It also provides flexibility should the company need to find a new supplier for raw materials or a new market for their products.
Despite these advantages, a distributed supply chain has significant weaknesses. Vertical integration addresses these weaknesses in several ways.
Better Logistical Control
The first of these weaknesses is the occasional need to scramble for new suppliers and contractors. While it’s good for a company to be flexible when it needs to find a new supplier or a contractor, it is better to have suppliers and contractors that are there when you need them. By vertically integrating with suppliers and contractors, Houston EB5 has better control of our supply chain.
Real estate development projects often involve numerous suppliers and contractors, making them vulnerable to supply chain disruptions. While many of these disruptions are minor and quickly resolved, they contribute to significant delays and cost overruns.
Integrating our supply chain makes Houston EB5 better able to synchronize the distribution of labor and material. The communication barriers that are a natural consequence of distributing the supply chain can be removed. Better communication up and down the supply chain allows us to get resources where they are needed on time.
Our vertical integration gives us the control needed to reduce losses caused by delays and supply issues. The enhanced stability and profitability this control give Houston EB5 protects your investment and your EB5 green card status.
The second weakness of a distributed model is increased overhead costs. Distributing the supply chain may reduce the initial capital investments needed to begin operations. In the long-term completing development projects piecemeal increases the capital lost to overhead and operating costs.
Each company adds its markup to the overall project costs in a distributed supply chain. These markups are small compared to the overall project budget, but the more companies involved, the lower the return on the investors’ capital.
Consolidating the supply chain reduces overhead costs by removing intermediaries and their profit margins. Eliminating the markups added by the companies along the supply chain can yield dramatic savings. These savings can reduce costs for the end buyer while increasing profit margins for the developer and its investors.
Not only does reducing the project overhead increase its profitability, but it also helps protect the stability of the investment. This is good news for investors relying on the project to secure their EB5 green card.
Economies of Scale
As mentioned before, one of the advantages of a distributed supply chain is a reduction in startup costs. A part of this is that a smaller, newer company needs to purchase less of a given resource to meet its needs. The problem with this is that while low-volume purchasing requires less up-front capital, it also generates higher per-unit costs. This benefits a startup but can be a barrier to later growth.
Houston EB5 has already cleared this barrier. By vertically integrating the supply chain of our projects, we have reached the scale necessary to control the volume costs of supplying our projects. This purchasing power is one of the ways we reduce costs and improve the stability of your EB5 investment.
Another problem with a distributed supply chain is the fluctuating price of raw materials. This is particularly visible with the market prices of volatile resources like rare-earth minerals, but common materials like lumber are subject to price fluctuations. The COVID-related lumber shortages of 2022 are an excellent example of this.
Integrating with a project’s suppliers helps stabilize the price of these materials and keeps project costs down.
Benefits of Vertical Integration
Investing the capital required for an EB5 green card can be a significant risk for many people looking to enter the United States. There is more than just profit riding on the investment, so it is a good idea to find an investment that’s as stable as possible.
Houston EB5 was founded by immigrants to the U.S. with an aim toward helping future immigrants. We understand how much is riding on a successful EB5 investment. We are committed to helping people find fast, safe, and reliable ways to immigrate legally. Our goal is to provide foreign investors who want to immigrate find better opportunities for investment growth through reduced uncertainty. One way we do this is by using our vertically integrated business model to control project savings.
If you are interested in immigrating to the United States through the EB5 program, we can help. You can learn more about EB5 green card investment opportunities by contacting Houston EB5 or visiting our home page.