Implementable Strategic Alternatives - Case Study Example

? ANALYZING AND WRITING CASESExecutive Summary The strategic accomplishment of an organization necessitates an apparent comprehension of the needs ofthe consumers and the market as a whole, and the contentment of targeted consumers more efficiently as well as more advantageously in comparison to the rival organizations. For attaining authentic competitive advantage, Edward Jones has to be in a position to fulfil its customer needs more efficiently than its peer organizations. The process of devising a strategy entails comprehending the outlook of the expectations of stakeholders, circumstances in terms of market and competition, in addition to the vision and objectives of a business organization. In general, the selection of strategy consists of a number of approaches. In organizational context, the choice of the approach relies on several factors such as the current situation of the company, the resources of the company, competencies and policies of the organization, risk tolerance potential, internal clashes, extent of external reliance and expected competitive response among others. With due consideration to these factors, the alternative strategies that have been recommended for Edward Jones comprise of a combination of expansion as well as product development strategy. The present day business environment is altering continuously due to the inclusion of new entrants, the development of substitutes and enhanced performance of competitors and so on. As a result, Edward Jones might require discovering ways to mitigate threats from rivals and ascertain that is benefits from its persistent customer loyalty. Some of the organizational strategies to consolidate the business could be enhancing the product or service quality, building better associations with customers so as to understand and meet their needs efficiently resulting in augmented customer loyalty. External Assessment The financial services industry functions on the principle of the trade-off between risk and return. The retail brokerage industry had made it possible for individual investors to invest in various financial securities, for instance stocks and bonds. This industry has evolved over the years and many factors such as increase in the worth of stock market, advent of technology and internet, increasing need of individuals to save for their future as a result of rise in the life expectancy level and rising expenses have contributed towards its rapid growth. Due to the rising competition in the market, diversification of investor needs and the increasing expectations of the customers, the retail brokerage industry primarily focuses on customer service. There exists a high level of convergence in the retail brokerage industry, which permits the companies to bundle their products as well as offer discounts. The rationale behind the convergence is that it is more cost-effective to cross-sell products. Moreover, the consolidation of the products results in shared information technology and elevated switching costs and acts as a major opportunity for the industry participants. The retail brokerage industry is highly correlated with the stock exchange market. The increase in the value of stock markets across the world has provided the industry with immense growth opportunity and would continue to do so. With the rise in the number of individual investors looking forward to make investments in various types of financial assets, the industry has huge growth potential. Though the industry has immense growth potential, the risky business practices that are the part of financial services organizations could bring about a stock market slump and adversely affect the retail brokerage industry. This is a major threat that the retail brokerage industry has to encounter. The instances of focus on short term benefits is more in the financial sector, as the managers of such organizations want to please their stock holders by providing them superior immediate returns. However, in doing so, more often than not the managers ignore the long-term sustainable value of the organization, which makes them collapse during difficult economic periods. Internal Assessment Edward Jones provides a varies assortment of financial services, ranging from savings, bonds, shares to financial planning services that are customised for individual investors, who are hesitant to take up risk and are also conscious about their capital. Edward Jones has constructed its competitive edge on the basis of providing financial services that could cater and meet the financial needs and requirements of the investors who belong to the middle class. The prime strength of Edward Jones is its strong brand image. It had built itself a highly regarded image by assisting individual investors make long-standing investment plans to support financial steadiness and accomplish decent rates of risk-regulated proceeds. It offers a wide range of products as per the customers’ demands and meeting their requirements. Another major strength of Edward Jones is its employee force. The company’s employees comprises of a very competent group of extremely accomplished and experienced brokers. This is another vital strength of the company other than its reputable image, which makes the company stand out amidst its peers. The brokers are assisted with a huge and efficient telecommunication system to initiate trades. A significant strength of Edward Jones is its compliance to high ethical standards. The company employs the same advanced level of ethical standards as well as admittance to services for their customer accounts, irrespective of their volume of trade. This uniform treatment to all its accounts had improved the trust and confidence regarding the company in the market. Current Strategies The strategy of Edward Jones presently, is to build up a strategic place in the financial services business segment. Attaining a strategic position in the industry would contribute significantly towards the sustainable profit growth of the company. The goal of the company is to stay competitive in the market, without losing the personal relationship focus that Edward Jones has grown upon. Though the company had been expanding to Canada and the United Kingdom, it had employed the same approach it had adopted in the United States. Key Issues One of the key issues facing Edward Jones is that there has been a constant rise in the number of rival organizations. These organizations offer a diverse range of products and also target the same customer group as that of Edward Jones. Furthermore, Edward Jones is yet to offer online services to its customers. It is necessary that the company updates its product offerings as per the current market trend, or else it would be left behind in the market competition. Till now Edward Jones had limited its business operations to the US, Canada and the UK. In the long run, it would be advisable for the company to venture into further geographic areas in order to sustain its market share. Implementable Strategic Alternatives There are number of strategies that Edward Jones can take up as alternatives. Amongst them the implementable strategic alternatives would be discussed in this section of the paper. One of the alternatives that Edward Jones could consider as an effective alternative strategy is the expansion into new offshore locations where the presence of the company is nil or still limited. The company should however, attempt to employ this strategy while limiting its presence in the scarcely populated rural regions, where the reputation of Edward Jones is not very high. The expansion into new geographic areas would broaden the company’s opportunities in terms of number of customers. This will also help the company to diversify its risks. The normal approach of such organizations is to set up an overseas business segment by establishing new outlets in the new territory or through exporting its products to others nations. The organizations employing this approach benefit from economies of scale, broader exposure to labor and resources, currency instability and the total magnitude of the market. However, the company should focus on the culture and the requirements on the new region and customize its products and services for that region, instead of adopting the same strategy it had employed for the US market. The other alternative could be the approach of product development, which would involve the introduction of fresh product offerings in Edward Jone’s current market. This approach is generally taken up by organizations when its products have reached the final stages of the product lifecycle and their markets have also matured. The third alternative that the company can take up is to recruit senior brokers and financial advisors who contribute a major portion of their competitors’’ business. Criteria and Evaluation of Alternatives by Criteria The market turmoil in addition to the economic instability had led to the emergence of a fresh phase of globalization, in which unpredictability is expected to continue being an invariable aspect. It is likely that the underlying variations in the rates of currency, goods as well as energy would become a constant in the present business environment, resulting in the emergence of fresh contemporary rivals, and increasing consumer demands. Such an atmosphere would probably pursue to agitate the business of Edward Jones for the times to come. In order to become competitive and sustain itself in such demanding atmosphere, Edward Jones would have to ensure that it reacts spontaneously and flexibly to the altering business atmosphere. When the current markets of a business organization reach a saturation point, it is likely that the organization would attempt to expand its operations in the markets of other geographical areas. Thus, expansion into foreign markets is a viable strategy for Edward Jones. However, the company should develop certain new expertise and proficiencies in order to extend to the overseas markets. The overseas extension also necessitates that the services or products of the company are altered and adapted to the specific requirements of the new target customer base. An alternative approach to reach the overseas markets is the exercise of internet and other sources as a distribution channel. Online marketing have evolved to be a chief form of distribution amongst many business organizations, which prefer not to have a physical presence in the overseas territories. The rigorously competitive market makes it difficult as well as costly for organizations to increase their market share. The financial services companies like Edward Jones have to continuously bring about new product offerings because their services and offerings can be replicated very easily and a very low expense. Furthermore, the present day customers look for alterations and development in the products and services offered to them. Hence, product development has become an imperative characteristic of the business segment. The third alternative strategy discussed would not be very appropriate because such a short-term approach generally neglects the risks as well as prospects associated with mere concentration on immediate results. This approach can have enduring ill effects on the organization’s overall value in the long run. The focus on the short-term gains of the company more often than not is likely to disregard the long-term sustainable value of the organization, which would make them falter during tough economic times. Recommendation and its Implementation Consequently, it can be stated that the growth strategies employed by Edward Jones on the whole can be of two fundamental varieties. First, for the augmentation of sales in the current business markets and second, for the development of sales by extending the business network both in terms of market as well as product offering. The company can elevate the sales of its existing products from its present markets by drawing existing non-customers towards them. The non-customers could be either those who do not at all purchase the products in the existing groups or those who purchase them from other rival companies. The alternative strategy that can be employed by the company to penetrate the market is to enhance the customer loyalty level of its customers by improving the value of their shopping baskets. The second strategic route available to Edward Jones is that of product development. It can be done by bringing out fresh products for the current markets of the company. These fresh products can be in the form of online trading. The company could also focus to develop product offerings suitable for investors whose age is over 50. These products can be annuities, retirement funds as well as life cycle funds. Additionally Edward Jones can also adopt defensive policies like introducing advances products that would not be possible for new entrants to the market to deliver. Such strategies would result in elevating the entry hurdles to the industry. Limitations and Critique of Recommendation The recommendations were based on the information provided in the case study about Edward Jones and its business in addition to the theoretical concepts and principles. Thus, the information and data pertinent to the company were limited. Further assessment and research about Edward Jone’s position could enhanced the chances of formulating more appropriate and customized alternative strategies for the company. Formulation of personalized strategies would have helped the company to cater to the exact needs and requirements of its customers in a better manner, in comparison to the hypothetical strategies that have been recommended in this study. Bibliography Collis, D., & Smith, T. (2009). Edward Jones in 2006: Confronting Success. Harvard Business School. Read More