Harpenden Building Society - Essay Example

?Harpenden Building Society Trends in banking and financial services market In the UK and wherever part of the world, marketing is an integral part of every organisation (Kotler et al., 1999; Armstrong et al., 2009; Silk and Harvard Business School Press, 2006; Mercer, 1996). This activity certainly applies to banking and financial services market. Marketing is very important because it is in this way an organisation is able to stimulate needs for its product or service offerings. This approach is very important especially in the case of organisations catering banking and financial services which are highly affected by global economic damage. These impacts have proven to be found on the cost and availability of credit; household budgets, mortgages, pensions, big and small company financing and other related funding issues (QFinance, 2010). Thus, the current trend is to substantially create a good financial market for banking and financial services that aim at stimulating market needs. However, it is not only one organisation that tries to play or compete in this type of market. There are many of them which eventually create competitive rivalry. According to Porter (1998; 1984), there are new market entrants, supplier power, buyer power and product and technology development that together create a certain force for competitive rivalry. This same scenario is certainly part of the banking and financial market. In fact, this is visible because of the presence of some policies. For instance, economic policy measures are very important because they can essentially remove barriers to outside competition (Maudos and de Guevara, 2007). Building societies versus banks There are major differences between banks and building societies even though they both belong to one category of banking and financial market. These differences are tantamount to the level of advantages and disadvantages an individual can possibly get. According to Building Societies Association (2011), there are three major differences between banks and building societies. One of these major differences is the emphasis that the building societies are mutual institutions. This gives certain rights and privileges to members who have savings account or mortgage to vote and acquire information. The second major difference is the fact that building societies are not companies which are successfully run by their shareholders. The good thing about this is that there are no external pressures from shareholders which normally on the point of maximising profits to pay away as dividends. Thus, this ensures operating the business at a lower cost, cheaper mortgages, and other better opportunities such as rates on savings compared to other competitors. Considering that there are different types of shareholders, it is important to understand that companies are always subject to different motives of shareholders in order for them to get substantial benefits to satisfy their needs. The third difference is in line with the limit of proportion of funds raise by building societies from wholesale money markets. This is a sort of giving much more security and in return it gives substantial opportunity for investors. Current Harpenden Building Society trends Based on its company website, the following are important information about Harpenden Building Society that can help trace its current trends (Harpenden Building Society, 2010). It can be noted that Harpenden is one of the active 52 UK building societies which primarily consists of 20,000 members with 25,000 accounts. Harpenden is amazingly having no borrowings on the money market. Starting in 2008, Harpenden’s deposits increased by over 11% and its mortgages increased by more than 9%. Not only that, Harpenden was highly commended for its mortgaged for SVR. From Best Children’s Account Provider, Harpenden won the Moneyfacts award. All of these only substantially illustrate the fact that the business for Harpenden is significantly increasing to the fullest as it substantially targets the right segment, moves and strategies that have substantial impacts on its operation. In fact, it is most important to substantially consider operation in general and this primarily includes the marketing aspect of stimulating needs for its service and product offerings (Boone and Kurtz, 2006; Belch and Belch, 1998; Groucutt et al. 2004; Moore and Pareek, 2009). The successful expansion of Harpenden Building Society The successful expansion of Harpenden Building Society is primarily based on the fact that building societies have successfully focused on specific strategies that have competitive edge over banks and other financial institutions (Marshall et al., 1997; Drake and Simper, 2002). In detail, Harpenden Building Society has focused on its customer care, financial consideration, internal business process and even on learning and growth (Harpenden Building Society, 2011). The Harpenden Building Society was able to consider strategic competitive moves that create specific edge over its competitors. This means that Harpenden was able to successfully differentiate itself. This strategy as part of the generic and strategic moves emphasised by Porter is in line with innovation that substantially tries to create something significant value proposition. This value proposition applied by Harpenden is absolutely effective because it substantially caters directly the needs of customers and its members. As it can be noticed, Harpenden’s accounts, deposits and mortgages have increased. These are all significant indicators that Harpenden Building Society has successfully expanded over time because of its high calibrated customer and employee care and effective operation management especially on its marketing activities. SWOT analysis Harpenden is known for its strength which is in line with its great potential to successfully influenced its stakeholders and be influenced by them. In fact, its corporate social responsibility is a proof that its stakeholders have significant role to play in its operation. This only means that Harpenden is strongly relying on feedbacks. However, total reliance on feedbacks from external stakeholders may pose significant problem considering that this can become tantamount to dictating what Harpenden should try to do as its significant moves. As a result to this, it may end up giving more favour to stakeholders, thus there can be no difference at all on how it operates and the banks’. The economic crisis is a major opportunity for Harpenden knowing that potential customers are after of their financial concerns. In this case many have tried to go for savings. The substantially low cost and pressure free financial performance of Harpenden is an opportunity for investors to take into consideration. On the other hand, economic crisis is also a threat knowing that customers may result to other options other than the service and product offerings provided by Harpenden or building societies. In addition, the new existing strategies produced by competing building societies may significantly eliminate the competitive advantage of Harpenden. Recommendation/Conclusion Harpenden has successfully expanded. This is a complex process in its part, but this can be well emphasised by considering more competitive moves especially on its marketing activities. Part of this is the essential understanding of its strength, weakness, opportunity and threat. Furthermore, there is a need to come up with more value proposition for its customer and employee care, financial aspects, internal business process and learning and growth. References Armstrong, G., Harker, M., Kotler, P., and Brennam, R. (2009) Marketing: An Introduction. London: Financial Times Prentice Hall. Belch, G. E., and Belch, M. A. (1998) Advertising and Promotion: An Integrated Marketing Communications Perspectives. 4th ed. USA: McGraw-Hill. Boone, L. E., and Kurtz, D. L. (2006) Contemporary Marketing. 12th ed. USA: Thomson/South-Western. Building Societies Association (2011) ‘What’s the difference between a building society and a bank’. [Online] Available at: http://www.bsa.org.uk/difference_bank_bs.htm (Accessed: 26 February 2011). Drake, L., and Simper, R. (2002) ‘Economies of scale in UK building societies: A re-appraisal using an entry/exit model.’ Journal of Banking & Finance, Vol. 26(12): 2365-2382. Groucutt, J., Leadley, P., and Forsyth, P. (2004) Marketing: essential principles, new realities. Great Britain: Kogan Page Publishers. Kotler, P., Armstrong, G., Saunders, J., and Wong, V. (1999) Principles of Marketing. 2nd ed. London: Prentice Hall. Maudos, J. and de Guevara, J. F. (2007) ‘The cost of market power in banking: Social welfare loss versus cost inefficiency.’ Journal of Banking & Finance, Vol. 31(7): 2103-2125. Marshall, J. N., Richardson, R., Raybould, S., and Coombes, M. (1997) ‘The transformation of the British building society movement: Managerial divisions and corporate reorganization, 1986-1997.’ Geoforum, Vol. 26(3-4): 271-288. Mercer, D. (1996) Marketing. Great Britain: Wiley-Blackwell. Moore, K. and Pareek, N. (2009) Marketing: the basics. 2nd ed. New York: Taylor & Francis. Porter. M. E. (1984) Competitive Strategy. USA: Free Press. Porter, M. E. (1998) Competitive Advantage. USA: Free Press. QFinance (2010) ‘Banking and Financial Services’. [Online] Available at: http://www.qfinance.com/contentFiles/QF02/g1xqynvv/17/0/banking-and-financial-services.pdf (Accessed 26 February 2011). Silk, A. J., and Harvard Business School Press (2006) What is marketing? USA: Harvard Business Press. Read More