Credit Acceptance Corporation
Network effect
CACC specializes in offering diverse finance programs, products, and services to automobile dealers, which enable the dealers to market vehicles to their target customers irrespective of their credit history. CACC offers its financing services across a network of automobile dealers located throughout the US. Upon joining the company’s financing programs, the automobile dealers enter a contractual agreement. Therefore, the relationship between CACC and the automobile dealers is based on a legal agreement, which gives the company the capacity to service, administer, and collect the customer loans due (“Credit Acceptance” par. 3).
CACC has adopted a unique approach, which entails targeting customers characterized by low credit ratings an opportunity to access loan services. This aspect has remarkably improved the attractiveness of the company’s financial services amongst customers who do not meet the criteria for conventional automobile financing (“Credit Acceptance” par. 3). Therefore, the company is likely to experience remarkable growth in the value of its financial services. This aspect will culminate in improvement in the company’s ability to maximize its profitability.
Cost advantage
CACC has attained sufficient cost advantage by focusing on leveraging economies of scale via market expansion. Currently, the firm has established 57 branches in the US. However, the firm has established an extensive network of offices. In 2012, the firm had established 1,248 offices in the US. However, in line with its continued market expansion, the company had increased its offices to 1,132 at the end of December 31, 2013, which represents a 45% growth. These offices have enabled the firm to minimize the cost of operation. Furthermore, the firm has been in a position to maximize its sales revenue by accessing a large number of customers. CACC intends to venture into the international market by establishing 16 branches in Mexico by the end of 2014 (“Credit Acceptance” par.7).
Efficient scale
CACC has been in a position to foster a high competitive advantage by focusing on the automobile sector. Thus, the company has focused on a specific niche market. This strategy has considerably improved the firm’s capacity to provide customers with optimal services. Furthermore, the company has managed to minimize the cost of offering services due to the high level of specialization that has been developed over the years.
Intangible assets
Since its inception in 1972, CACC has developed a strong brand in the US automobile finance industry, which has remarkably improved its competitive advantage. The company is ranked as one of the industry leaders. Its success in developing a strong brand has originated from the adoption of prudent strategic management practices. Furthermore, the company’s brand has also undergone remarkable growth due to its unique operation model, which provides consumers who cannot access automobile credit services from conventional financial institutions.
Switching cost
CACC has established a considerably high switching cost through its BHPH model. By issuing credit finance to automobile customers within the low-income category, CACC has made it difficult for its customers to switch to traditional financial institutions such as banks. Additionally, the company facilitates the operations of automobile dealers by offering attractive credit finance services. Therefore, automobile dealers cannot easily switch to competing firms. Thus, the company is likely to experience an increase in its profitability due to the created ‘lock in’ effect.
Black Rock Incorporation
Network effect
Black Rock Incorporation specializes in the provision of asset management. The firm has developed a broad portfolio of risk management and investment services. In an effort to maximize its profitability, the firm has targeted diverse taxable, tax-exempt individual customers and institutional customers. The recent global economic recession has remarkably increased the level of uncertainty amongst consumers due to the decline in the value of financial services.
As the economy recovers, the demand for credible asset managers has increased remarkably. Since its inception, Black Rock Incorporation has succeeded in offering diversified product offerings. Thus, the firm offers alternative and traditional investment packages following the customers’ risk spectrum. Its competency in offering high-quality asset-management services is likely to promote the value of the company’s services (“Black Rock Incorporation” par. 1).
Intangible assets
Black Rock Incorporation has positioned itself as a global brand within the asset management industry. The company is ranked 94th amongst the Fortune 100 companies. One of the factors that have contributed to the growth in the company’s brand relates to its expertise and record in long-term investment performance. The firm’s operations are facilitated by a well-trained investment team, which is distributed in different parts of the world. Furthermore, Black Rock Incorporation has nurtured optimal analytic capabilities, which improves its efficacy in offering clients quality risk-management services. Therefore, investment teams have enabled the company to offer attractive and comprehensive asset management packages across different asset classes, investment strategies, and geographical locations (“Black Rock Incorporation” par.1).
Cost advantage
The company has established high economies of scale by launching outlets in different parts of the world. Currently, the company has established operations in over 100 countries. Furthermore, the company has established over 100 offices in over 30 countries. This aspect underscores the extent to which the company has established an effective distribution network. Subsequently, Black Rock Corporation can manage the assets of millions of customers across the world cost-effectively. The extensive distribution channel has led to a remarkable reduction in the marginal cost of managing an extra package due to the reduced fixed cost. Presently, the company is managing over 7,700 portfolios (“Black Rock Incorporation” par. 2).
Efficient scale
The company has attained an efficient scale of operation by focusing on the asset management industry. Subsequently, the firm is likely to experience optimal growth by developing products that address the clients’ asset management needs. Furthermore, niche marketing will improve Black Rock’s capacity to succeed in its research and development activities. Therefore, the firm will succeed in developing attractive asset management products. Due to its niche marketing strategy, Black Rock has been in a position to succeed in improving its operations by establishing new businesses related to asset management. For example, the company has established Black Rock Solutions, which has enabled clients to access risk-management services.
Switching cost
Black Rock Corporation has increased the cost of switching amongst its customers. One of the factors that have increased the cost of switching entails the relatively low fees charged by the company on its asset management services. Its capacity to lower the fees has been necessitated by the developed high economies of scale. Therefore, there is a high probability of the company experiencing an increment in its customer base due to the high cost of switching to competing companies (“Black Rock Incorporation” par.3).
T. Rowe Price Group Incorporation
Intangible asset
The company has established a team of talented associates, who have significantly contributed to the development of a high level of organizational stability. The associates [located in different parts of the world] collaborate in sharing different investment perspectives, hence improving the firm’s capacity to provide optimal investment solutions to its clients. Therefore, the high level of collaboration amongst the associates has remarkably improved the firm’s competitiveness regarding the investment approach. Investment in intensive research has enabled the firm to improve its investment approach continuously. Due to the strength of the brand, which has been enhanced by effective management, T. Rowe Price was incorporated into the S&P 500 Index in 1999.
Cost advantage
T. Rowe Price has developed optimal structural cost advantage, which has arisen from its operational efficiency hence undercutting the competition. To deal with competition, T. Rowe Price has based its operations on an extensive market research model. Consequently, the firm is in a position to provide customers with value-added investment products.
The firm has established a comprehensive global research platform that is comprised of a well-connected team of 185 research analysts. The analysts undertake intensive quantitative and qualitative bottom-up analysis on investment, hence promoting the company’s ability to offer competitive products. The success of the company’s research platform is enhanced by the high rate of collaboration amongst the research analysts. Furthermore, the firm has also gained optimal cost advantage by focusing on gaining adequate economies of scale by establishing subsidiaries in different parts of the world (“T. Rowe Price”2).
Efficient scale
T. Rowe Price has succeeded in developing market leadership with the asset management industry. One of the factors that have promoted the company’s attainment of minimum efficient scale relates to the development of economies of scale in serving financial intermediaries, individual clients, and institutions. The firm’s success in serving these clients has been fostered by its adoption of extensive investment strategies, which leads to high levels of customer satisfaction (“T. Rowe Price” 3).
Network effect
The company’s operations within the asset management industry present a perfect opportunity to benefit from the network effect. One of the factors that will foster growth in the value of the company’s assets entails the high rate at which consumers are seeking experienced asset managers to deal with economic fluctuations such as the recent global financial crisis. The crisis affected the value of financial instruments. Additionally, it also increased the global economic uncertainty and risk. Subsequently, customers are taking caution by seeking reputable asset management companies.
Additionally, the value of the company’s financial services will also be improved by its ability to provide customers with a broad range of investment instruments. Additionally, the firm provides customers bonds, blended assets, and money market instruments. Thus, customers are presented with a broad choice (“T. Rowe Price” 2).
Switching cost
In its provision of asset management services, T. Rowe Price has differentiated its operations optimally. One of the strategies that the company has adopted involves the integration of a fixed income approach. The decision to adopt this approach has arisen from the company’s commitment to providing its clients with consistent results through the effective management of individual bonds. The majority of the company’s bonds have a maturity period ranging between 5 years to 25 years. Therefore, the fixed income approach has enabled the company to leverage on the high cost of switching optimally.
Navient Corporation
Network effect
Navient Corporation specializes in providing asset recovery and loan management services to educational institutions and governments. One of the core education segments that the firm targets include higher education. Currently, the firm provides loans to over 12 million clients. By 30 June 2014, Navient Corporation managed a student fund worth $130 billion. The company projects the student loan fund to improve the consistency and predictability of cash flows (“Navient Corporation” 3).
In addition to the above aspects, the value of the company’s services is expected to grow due to the emerging industry dynamics. Most governments are increasingly anchoring their economic growth on well-established education systems. Additionally, governments are prioritizing the education sector in their policy formulation processes. Thus, there is a high probability of the company’s loan management services experiencing remarkable growth in value. According to the company’s Form 10k, over 80% of the total student education loans are funded to term. These dynamics enhance the potential of Navient Corporation to increase its customer base (“Navient Corporation” par.3).
Efficient scale
The Company has managed to develop a sufficient efficient scale by focusing on a niche market. One of the niche markets that the company has integrated entails the education sector. Subsequently, the firm has been in a position to exploit the niche market optimally by offering products that are customized to the clients’ needs. Furthermore, the company’s focus on the niche market has contributed to remarkable improvement in its operational efficiency because of developing adequate expertise concerning the provision of credit services in the education sector. Currently, Navient Incorporation is ranked as the largest education loan servicer.
Cost advantage
Over the past four decades of its existence, Navient Corporation has developed a sufficient cost advantage due to its well-developed asset recovery infrastructure. The well-established infrastructure improves the company’s capacity to increase its scale of operation at a minimal cost. The company has developed a sufficient and high-quality asset base, hence attaining predictable cash flow.
Intangible asset
Navient Corporation has improved its competitiveness remarkably by positioning itself as a strong brand. Currently, the company is ranked as a leader with reference to servicing education loans. A team of credit-service management experts manages the firm’s operations. The company is renowned for its success in preventing superior default. Subsequently, the company has been ranked first about cumulative default prevention. Owing to its effective credit service management services, Navient Corporation has managed to reduce the rate of loan default amongst customers by more than 30% as compared to the national average. Its success in reducing the rate of default has emanated from the adoption of the ‘customer first’ approach (“Navient Corporation” par.4). The success in preventing loan default has improved the company’s reputation significantly. Thus, the company is likely to succeed despite the existence of potential competitors.
Switching cost
Navient Corporation’s provision of credit services such as loan management and services to educational institutions has played a fundamental role in increasing the switching cost. Due to its well-established credit service management techniques, the company has managed to differentiate its services effectively. This aspect has led to the development of a strong level of loyalty amongst its clients. Therefore, Navient Corporation has reduced the likelihood of clients switching to credit services offered by competing companies.
Discover Financial Services
Network effect
In addition to direct banking services, DFS is renowned for its discover-brand credit card. Presently, over 25 million customers use the company’s Discover Credit Card. The card provides customers with an opportunity to access different banking services such as consumer and business accounts. Furthermore, the company licenses a different type of credit card, viz. the Dinner Club credit card. The Dinner Club credit card is currently accepted in over 185 countries. To gain a competitive advantage, DFS has ensured that its credit cards are unique. For example, customers are provided an opportunity to replay their debt obligation over a specific period (“Discover Financial Services” par.1).
Additionally, the interest rate is predetermined and can be either variable or fixed. As more customers and businesses around the world appreciate the advantages associated with using credit cards, the company will experience a significant increment in demand for its credit cards. Subsequently, the value of the company’s product will experience remarkable growth (“Discover Financial Services” par.2).
Cost advantage
Discover Financial Services is committed to attaining an optimal cost advantage. The company has developed sufficient cost advantage by adopting an effective operating model and establishing a strong distribution network. The company’s operations are managed through two main segments, which include payment services and direct banking. The operating model enhances the company’s ability to introduce new consumer banking products per the clients’ needs. Additionally, DFS has established its operations in different locations around the world. Some of the markets that the company has entered include China, Canada, Japan, the Caribbean, and Mexico. The company’s operations in different locations have reduced the cost of introducing a new product significantly (“Discover Financial Services” par.1).
Switching cost
Despite its diversification strategy into banking loans and credit card services, the company experiences intense competition due to the existence of a large number of industry players. With reference to its credit card services, DFS faces a high threat from other well-established global credit card providers such as MasterCard and Visa. Subsequently, the firm is characterized by a low cost of switching to competing products.
Efficient scale
The company specializes in offering diverse financial products such as loans, credit card services, and banking services. Subsequently, the firm has limited its operations to credit services. Thus, the company has succeeded in generating economic profits due to focusing on a niche market, as evidenced by the firm’s decision to limit its operations to credit services. Thus, the firm is likely to experience remarkable growth by developing its capacity with reference to credit services. Furthermore, the firm has achieved economies of scale in its operation by adopting the concept of acquisition.
Intangible asset
Discover Financial Services has developed a strong brand with reference to its credit card services. Subsequently, the company’s Discover Credit Card constitutes an important intangible asset. The company’s brand has gained sufficient market recognition in the United States due to its banking products and the flagship credit card business. The strength of the company as a brand is further increased by the view that it has established one of the most comprehensive Automated Teller Machine networks, which are commonly referred to as the PULSE. This network provides millions of customers with an opportunity to access banking services in different parts of the world (“Discover Financial Services” par.1).
Internal competitive resources and strategy
Credit Acceptance Corporation
CACC is focused on developing a sustainable competitive advantage by leveraging its internal resources. One of the most important resource elements that the company has focused on relates to the capability of its human capital. Since its inception, CACC has been focused on leveraging the skills and expertise of its human capital.
The company’s operations are sustained under the leadership of a team of experienced workforce, which improves operational efficiency. In an effort to succeed in sales and marketing, the company has allocated area managers in all its markets in the US. Additionally, the level of expertise amongst the firm’s managers has led to an outstanding level of governance within the firm. Therefore, the firm sustains a high level of credibility amongst individual and institutional customers. Thus, the firm is able to attract new dealers. Additionally, the firm has succeeded in sustaining long term business relationships with over 56,000 franchised and independent dealers in the US (“Credit Acceptance Corp” par.6)
Furthermore, the company’s success in maximizing the value of its workforce is evidenced by its commitment to establishing a strong organizational culture. One of the approaches that CACC has adopted in improving the quality of its workforce entails an effective selection process. The company focuses on five main qualities in selecting its workforce. These qualities include a positive attitude, respect, honesty, insight, and communication.
By focusing on these elements, CACC has succeeded in establishing a collaborative working environment. For example, the firm is in a position to integrate the concept of teamwork, hence improving its effectiveness in providing optimal solutions to its clients. Consequently, the firm’s workforce is in a position to serve customers satisfactorily. The high level of productivity amongst its workforce has led to a remarkable improvement in the company’s value amongst the target customers.
Strategy
CACC appreciates the importance of attaining a long-term competitive advantage. In a bid to achieve this goal, the company has integrated different strategies. One of the core strategies that CACC has integrated entails the focus strategy. The company has integrated this strategy by targeting automobile dealers and customers. Through its BHPH model, CACC is in a position to meet the financial needs of automobile dealers and customers. For example, the company offers financial credit to automobile dealers, hence enhancing their capacity to sustain their operations. Furthermore, the company implements the focus strategy by targeting customers who might not access financial credit from conventional financial institutions because of their credit history.
In addition to the focus strategy, CACC has also integrated a cost leadership strategy by implementing a comprehensive functional structure. The company’s decision to incorporate the cost strategy has been spurred by its commitment to sustain long-term growth. The company’s management team is of the view that attaining cost leadership will promote its ability to sustain a long-term dealer-partner relationship, which constitutes a fundamental aspect of its growth strategy.
The firm has developed a comprehensive package that attracts the target individual and institutional customers. For example, it has set a benchmark with regard to the average consumer loan that can be issued. Furthermore, the company has integrated a relatively low rate of interest of 12.6%. By adopting these credit terms, CACC has succeeded in sustaining a low-cost strategy, hence improving its product’s attractiveness to potential automobile customers. However, the company is committed to minimizing the rate of default at a considerably low level.
T. Rowe Price Group Incorporation
Since its inception in 1937, T. Rowe Price Incorporation has attained remarkable milestones. Its success can be associated with the management of internal competitive resources and the implementation of an effective strategy as evaluated herein.
In its quest for sustainable competitive advantage, T. Rowe Price has appreciated the importance of positioning itself as a knowledge-based organization. In a bid to achieve this goal, the company has been focused on exploiting the knowledge and skills of its workforce located in different parts of the world. The company believes that its long-term success is dependent on active management and proprietary research. Additionally, the firm appreciates the importance of integrating an effective market research approach in order to survive in the contemporary business environment, which has become very unpredictable. Therefore, the company has established an extensive global research platform, whose operations are sustained by a high level of interconnectedness.
The research team undertakes intensive research on diverse investment aspects related to different economic sectors. The views and opinions generated by the research analysts are shared and discussed in order to ensure that only feasible solutions are implemented. This aspect enhances the company’s capacity to provide its clients with high-quality investment solutions.
In the course of implementing its investment approach, T. Rowe Price asserts that experience does not have a perfect substitute. However, the success with which an organization transforms itself into a learning entity depends on its effectiveness in exploiting its workforce’s skills and knowledge. The company has succeeded in developing a seasoned investment team. Moreover, the interconnectedness amongst the company’s research analysts irrespective of their geographic location has enabled it to succeed in transforming itself into a learning organization due to the high level of knowledge creation, utilization, sharing, and retention.
T. Rowe Price is successful in leveraging the collective experience and individual expertise of its workforce. Thus, the firm is in a position to respond to evolving market conditions such as a change in its customers’ investment behavior due to economic changes. Therefore, one can argue that T. Rowe Price is successful in exploiting its workforce’s tacit knowledge, which is a critical intangible asset in organizations’ long-term success.
The company is also focused on exploiting its fixed income capabilities in nurturing sustainable competitive advantage. The firm has succeeded in establishing a strong financial base, which is estimated to be $ 165.9 billion (“T. Rowe Price” 2).
Strategy
In addition to internal resources, T. Rowe Price appreciates the importance of integrating effective strategy in attaining sustainable competitive advantage. The company has adopted one core strategy, viz. the differentiation strategy. The company’s decision to adopt the differentiation strategy has been prompted by the need to attract and retain a large number of customers. The T. Rowe Price Corporation’s differentiation strategy is evidenced by the firm’s commitment to research and development.
Through its research and development approach, T. Rowe Price has been in a position to nurture an effective knowledge-creation system that is difficult to imitate. Consequently, the company can improve and develop new investment products continuously. By differentiating its products, T. Rowe Price has subjected its customers to a high switching cost. Moreover, the adoption of the differentiation strategy has improved T. Rowe Price’s ability to provide value to its customers.
Black Rock Incorporation
Black Rock Inc. has succeeded in maintaining its market leadership within the investment industry. Its success can be attributed to its commitment to exploiting its internal capabilities and implementing an effective strategy as explained below. Black Rock is focused on developing its internal resources. One of the resources that the firm is committed to leveraging relates to financial resources. Over the years, the company has maintained a positive trajectory with reference to growth in its net income. For example, the company’s net income increased from $ 5.78 billion in 2008 to $16.87 billion in 2013 (“Black Rock Incorporation” par. 1).
The growth in the financial capability has enhanced the firm’s flexibility remarkably in responding to external threats and market opportunities. For example, the company has been successful in establishing new businesses such as Black Rock Solutions, which specializes in providing advisory services on risk management to institutional clients. Therefore, the firm’s financial stability over the past decades underscores its ability to sustain a positive financial performance into the future.
The company’s leadership also constitutes a critical internal resource. Its team of experienced managers has enhanced the firm’s global success considerably. The Global Executive Council manages the firm’s global operations. The council is charged with the responsibility of undertaking diverse governance roles such as maintaining the company’s external affairs, formulating strategy and planning, risk management, and talent development and retention. By formulating effective corporate governance policies, the Global Executive Council has enabled Black Rock to attain a global reach.
The company also considers human resources as a vital internal resource by integrating diversity within its workforce. Therefore, the company appreciates diversity as a source of knowledge and ideas, hence improving the quality of its investment solutions. The firm considers the knowledge and ideas generated by its employees located in different parts of the world as a fundamental element in its pursuit of excellence. In order to exploit the employees’ knowledge capabilities optimally, Black Rock has adopted an effective organizational structure that is free from bureaucratic tendencies. Furthermore, the company considers open communication as a basic element in fostering a culture of product innovation (“Black Rock Incorporation” par.1).
Strategy
Black Rock Incorporation has based its competitive advantage on the differentiation strategy. The firm ensures that its products are designed in accordance with the target customers’ needs. It has differentiated its investment products into passive and active products. In line with its differentiation strategy, the company has developed diverse investment portfolios such as fixed income portfolios, money market instruments, multi-asset and single-asset equity portfolios, and exchange-traded products (“Black Rock Incorporation” 1).
Due to its product diversification strategy, Black Rock Incorporation has been in a position to provide its clients with a unique investment platform. Furthermore, the company’s differentiation strategy has greatly improved its product diversity. Therefore, the firm is in a position to provide its clients with an opportunity to construct an effective investment portfolio, which is comprised of alternative and traditional investment products. Moreover, the integration of traditional and alternative investment products has enabled Black Rock to attract clients across the risk spectrum. In summary, one can argue the differentiation strategy has played a fundamental role in increasing the cost of switching to competing products. Furthermore, the differentiation strategy has minimized the threat of substitutes considerably.
Discover Financial Services
Discover Financial Services recognizes the importance of exploiting internal resources in maximizing its competitive advantage. Additionally, the firm appreciates the importance of integrating an effective strategy as discussed herein. One of the internal resources that the firm has focused on involves human resources. The company perceives human capital as a fundamental asset in attaining long-term business excellence.
In order to succeed in exploiting this internal resource, DFS has integrated a number of policies. First, the firm is committed to fostering a favorable working atmosphere by integrating diverse approaches such as an effective reward system coupled with providing employees with an opportunity for professional growth through training. This aspect has played a fundamental role in improving the level of satisfaction amongst its workforce. Subsequently, its workforce is able to offer high-quality customer services. Additionally, the firm has been able to reduce employee turnover (“Discover Financial Services” par.6).
In addition to human capital, Discover Financial Services is also committed to leveraging its physical resource. One of the physical resources that the company has emphasized on developing relates to technology. Subsequently, the company has established an effective technology system. The system is partly owned by DFS and third-party vendors. The third-party vendors own data centers that are critical in improving the efficiency of the company’s networks. Additionally, the third-party vendors enable the firm to maintain its operations, hardware, and telecommunication systems.
Furthermore, DFS considers resource interconnectedness as a critical internal resource and a source of competitive advantage. In order to foster a high level of interconnectedness, DFS liaises with various point of sale authorization, which has remarkably promoted the firm’s connectivity (“Discover Financial Services” par.2).
Strategy
Despite the intense competition that Discover Financial Services faces from other financial institutions and credit card companies, the firm is focused on attaining an optimal market share. In a bid to achieve this goal, DFS has adopted the focused cost leadership strategy. The firm’s motivation to adopt this strategy was spurred by the need to gain a competitive edge, especially within the credit card market segment. One of the approaches that the firm has adopted in implementing this strategy involves the elimination of annual fees on its credit cards. Available literature cites annual fees as one of the major costs incurred by credit cardholders.
Most credit card companies adjust their annual fees in an effort to shield themselves from losses. However, price adjustments increase the cost burden incurred by cardholders. Consequently, a substantial number of cardholders might not be in a position to meet their credit card payment. In an effort to regulate the annual fees charged on credit cards, the US government formulated the CARD Act of 2010. The Act provides the limits within which credit card companies can re-price their credit cards (“Discover Financial Services” par.2).
In spite of the adverse economic changes that have occurred over the past decades, DFS has remained true to its no annual fee policy. This approach has enabled the firm to develop and sustain a positive heritage amongst its clients. Furthermore, the adoption of the no-annual-fee policy has remarkably contributed to the firm’s capacity to sustain its low-cost leadership strategy. The above analysis illustrates that DFS is focused on attaining long-term business success by leveraging its internal resources and effective implementation of the strategy.
Navient Corporation
Navient Corporation intends to improve and sustain an optimal market position in the credit services industry. Subsequently, the company has focused on a number of its internal resources. One of Navient Incorporation’s core internal resources entails its financial resource. The company has sustained a positive financial performance over the years. For example, it reported a $ 526 billion net income during its first half of the 2014 financial year. The company had recorded a net income of $888 during the first half of its 2013 financial year (“Navient Corporation” par.2). The firm’s positive financial performance hinges on its strong student loan portfolio.
Due to its strong financial capability, Navient Corporation is in a position to invest in meaningful growth opportunities. For example, the company has integrated an opportunistic acquisition strategy by targeting private education loans portfolio and the Federal Family Education Loan Program. Thus, the firm is likely to sustain its long-term growth path (“Navient Corporation” par.3).
Additionally, the company’s success is also enhanced by a skilled workforce, which facilitates the successful management of a huge fund. The firm is committed to improving the quality of its workforce in order to promote the success of the various business segments. For example, by 30th June 2014, Navient Corporation managed a student fund worth $130 billion (“Navient Corporation” par.4). The company’s operations are run under the watch of a team of relationship managers, who are focused on understanding the clients’ unique needs. Therefore, the company is in a position to offer customers relevant and timely solutions.
Moreover, the firm’s top management teams have also integrated effective management practices, which have improved its attractiveness to stockholders. For example, the company has adopted a policy that progressively increases the stockholders’ value through share repurchases. Navient’s ability to implement this strategy emanates from its effectiveness in generating capital and sustaining a positive cash flow.
Navient also considers its relationship with external stakeholders as a fundamental internal resource. In order to develop and sustain a positive relationship with the clients, the company undertakes extensive training on its workforce, hence increasing the employees’ skills and work standards.
Strategy
In its pursuit of competitive advantage, Navient Incorporation has adopted the focused differentiation strategy, as evidenced by its focus on the education sector. In its differentiation strategy, Navient Incorporation has mainly targeted federal and private students and parents loans. The firm’s differentiation strategy is aimed at assisting clients to repay their loans, hence improving their creditworthiness. Furthermore, the focus differentiation strategy has played an essential role in assisting students to manage loan delinquency. The differentiation strategy has enabled the company to succeed in increasing switching costs amongst customers. In a bid to succeed in implementing this strategy, Navient Incorporation has established the Department of Education Loan Servicing. The department is charged with the responsibility of providing clients with in-depth financial literacy (“Navient Corporation” par.3).
The firm’s commitment to implementing the focused differentiation strategy is evidenced by its dedication to targeting different market segments, viz. the private education loans segment, the business services segment, and the Federal Family Education Loan segment (“Navient Corporation” par.3). By adopting a differentiation strategy, Navient has attained an optimal market position in the global credit services industry. In summary, Navient Corporation is committed to exploiting its internal resources in order to promote sustainable competitive advantage.
Works Cited
Black Rock Incorporation: Form 10-K 2011. Web.
Credit Acceptance Corp: Form 10-K; annual report 2014. Web.
Discover Financial Services: Annual report on form 10-k 2012. Web.
Navient Corporation: Annual report and proxy statements 2013. Web.
T. Rowe Price Group Incorporation: Form 10-K 2013. Web.