Strategic analysis of the firm and identification of the Key strategic issues facing it.
i) Marketing Strategy
As a marketing strategy for AUFS to penetrate into the UK market, it will happen in two phases where the first phase will involve the AUFS joining HSBC in partnership, which is headquartered at London in the UK. There will be no outreach towards the target of the union members at this stage but its meant to make the AUFS famous among the UK citizens that can be perceived as the entry point in creating the confidence of the potential customers. HSBC is the most appropriate entry point into the UK market because of its wide coverage as a financial institution in the UK that includes a large number of participants alongside it reputation. The working of AUFS with HBSC in the first year in the UK will uplift the reputability of AUFS as a focused institution as it will derive the reputations from t partnering with the HSBC. The AUFS is also likely to shelter under the HBSC umbrella over the risks that comes with the start of a new business in one given area because it will be operating as a segment in the HBSC. The AUFS will concentrate in actual marketing on working as an independent entity in the second phase where now it has to work it alone in targeting the UK union members and it is at this point that it will engage in the issues that pertains to prices, service mix, places of locations and also the politics.
The pricing of the products offered by the AUFS will be set depending on the UK market conditions, that is providing the mortgages at the market interest rates. The prices should not be related to the ones in the United States because of the variations that are likely to occur in terms of the demand elasticities, however the market in the UK seem to like the one in the US. The purpose for offering the services at the market price is to enable the competitiveness of AUFS as a new entrant into the industry and for that reason the price will be used as a tool for swaying potential clients into the AUFS products. AUFS in UK will also consider the service mix and the reason for considering the service mix is to ensure that the products offered are relevant according to the demands of the clients and also covers a wide range of choices that will in turn have an impact of attracting more clients to participant, which will enable the AUFS to increase its income level, thus the purpose for the service mix is to ensure that more potential clients are accommodated in the AUFS programs despite their varied interests in the mortgage industry.
The location of the AUFS branches in various parts of the UK will be guided by the pattern over which the worker unions are spread across the country and this is meant to increase the possibility of attracting more unions into the AUFS programs with the minimum possible number of resources committed to attract the customers. It will be wasteful if the branches were allocated in places with few union workers because the resources held within such branches will not be well utilized in optimizing the returns in the AUFS, therefore branches will be allocated in places with a quite reasonable number of worker unions for a start and then move to other places as the demand for the company’s products increase.
ii) Distribution and Sales Channels
AUFS require to device a good distribution and sales strategy because it through these two issues that it will increase its sales by reaching the rich markets that are certain to offer the best price in the market and also the possible large number of customers. The AUFS will work through the intensified network of the HSBC in reaching the market and the choice of HSBC is based on the reasons that its is financially strong, it has a good connection in the UK, the facilities and the equipments that it posses, it’s current status of the personnel, the extent in which it committed to other businesses and it’s reputation as a good performer.
Therefore distributing the products using the HSBC network will be an advantage to AUFS because it will enable the AUFS to minimize the costs of operation as it does not need to establish new facilities to extend their operations, otherwise they will utilize the facilities of HSBC. The reputation of the HSBC will also enable the potential clients to have confidence in the services offered by AUFS as HSBC is certain to advocate for the services as the AUFS works through its network. The good connection of the HSBC implies that AUFS is likely to reach potential clients with less effort compared to the situation where it was to work it alone and more especially in anew market that the company has less knowledge about its operations and the products that are offered, thus a way of opening up opportunities in an easy way.
The company will also reach the union members through direct mail solicitations augmented by online and telemarketing activities. This will be the best choice for distribution and making sales as about one third of the British adults banks online, where the figure is projected to increase during the next five years according to the report released by Forrester research. The current number of persons that bank online in the UK is 15million and it is expected to increase to 22 million by 22 million, meaning that the company should adapt the Internet channels in making it relevant in the market and enabling the transactions to be done in an easy and efficient way.
The company will also open branches in the UK as strategy of distributing and selling its products but this will by guided by the market richness of various parts of the country, which is meant to avoid the holding of resources in a branch that does not utilize the resources optimally. The amount of resources in each branch that is established in the UK will be guided by the market richness and this is meant to avoid idle resources which could otherwise have been put into profitable uses that would have increased the company’s wealth. The measure for the market richness will be guided by population dispersion pattern where places with large population sizes are expected to provide more potential clients. The company is considering to open two branches in London with a population of 7,615,000 residents (metro. area), and 7,429,200 (city proper). The other large population centers will have one branch. These include the following cities: Glasgow, population of 1,099,400; Birmingham, 971,800; Liverpool, 461,900; Edinburgh, 460,000; Leeds, 417,000; Bristol, 406,500; Manchester, 390,700; Bradford, 288,400.
iii) Pricing Strategy
The UK market is considered as being a competitive market in the sense that the prices are determined by the market mechanisms that is comprised of the demand and supply forces. AUFS faces a challenge as anew entrant into the UK market meaning that the company is likely to operate at a higher cost compared to the incumbents in the market through its additional costs in creating public confidence and also the establishment of facilities in which the incumbents are not experiencing thus implying the the profits margins are likely to be low at the start. The company will be limited to setting an arbitrary price and still remain in the market as all the companies in the industry are price takers.
In solving this challenge the company will set its price at a competitive price in market but has to be slightly below the market value and also engage in the optimal utilization of its resources as a strategy to enter into the market and also make reasonable profits to cater for the expenses in the process of trying to survive in the market. The setting of the price slightly below the competitive price is meant sway the clients into the company that will enhance the company to increase its customer base and sales too, on the assumption that a decrease in price will lead to an increase in the demand of the company’s products on the condition that the quality of the products are to be either equivalent to the ones in market or better than them. The optimal utilization of the resources of the company will ensure that the profit margins are increased which will compensate the disadvantage that arise from the company being a new entrant into the market and having to compete which the incumbents who are experiencing lower costs of operation that advantages them in the price war. The aim for all these activities to make the company competitive and relevant in the market.
The optimal utilization of the company’s resources will continue even after the company attaining full competence in the industry compared to the incumbents as this will create a comparative advantage that will enable the company to offer its products at a slightly lower price compared to the market price, which will maximize sales as a strategy for increasing the revenue and hence the profitability of the company. The price of the products in as far as the nature of the industry implies the charging of lower interest rates, where interests rate is the price for money in the economic sense.
iv) Promotion and Advertising Strategy
The company should choose the most effective promotional and Advertising tactics which are meant to create public awareness and confidence. The company mainly targets union members and for that reason it ought to choose a media that will reach union members with much easy and also in a cost effective manner. The channel to choose in promotion and advertising will be evaluated on the basis of cost and effectiveness in the process of avoiding heavy expenditure on promotions and advertisements that have insignificant impact in improving the customer base of the company.
The most suitable advertising tools will include the airing of advertisements on local radio and TV stations, advertisements on the local dailies including also the business journals. The company will also engage in making advertisement online through the frequently visited websites including the website of various worker unions. The company will also give out a promotion on its first customers, which will be based on the grace period that the clients has to be given before they start servicing their mortgages and this will have an impact of drawing a reasonable starting base of customers. The company will also use the snow pole tactic of increasing its customer base on the sense that the already existing customers will be satisfactory serviced which will have an impact of attracting more customers because the existing customers are likely to spread the message and in this case about the positives in AUFS.
As a strategy for reaching the public and by the use of the HSBC customers database, the company will coordinate with HSBC through its mailing activities to directly inform the customers about the merger of the two companies and also the products that are provided by AUFS. This will market the company among the customers of HSBC in the UK and this will have a further impact as the customers are likely to share the information with other potential clients within the UK. In response and in preparation to operate independently from HSBC, the company will lay a personalized relationship with the customers that it will acquire from this kind of marketing strategy, which is meant to prepare the customers psychologically that the operations of the AUFS are completely different from the ones of HSBC.
v) Services Strategy
The UK market seem to behave more like the one in the United States but the company will have to treat the UK market as a different market from the United States on the sense that the company will be at its entry level in the industry in the UK and for that reason, the challenges that it is expected to face in the UK are not the same as the ones that its facing when operating in the US due to the varied stages of the cycle. The company will provide services that are likely to be compatible with the desires of the UK population in relation to what the market is offering at the current times. The purpose for doing this is to create acceptability of the company into the UK market, and making its operations and products relevant in the market, otherwise negative returns are certain to be realized if it does not consider the desires of the UK market.
vi) Legal Decision making Strategy.
The legal regulations in the UK are certain to affect the company just from the merging of the company to the state where it will have to operate as a separate entity in the UK and for that reason, the company requires a legal advisor and for that matter someone who can be handling the legal matters on it’s behalf on avoiding the misconception of some legal procedures that are likely to cripple the operations of the company. This will be achieved by the company hiring an expert who understands the legals issues associated with the mortgages industry and the worker unions. The person need also to have a practical experience over the same field and the experience should be based in the UK. The legal practitioner should be acquitted to the UK’s culture.
vii) Technology and Infrastructure
The company’s technology level and also the king of infrastructure that is used within its operations influence the company’s performance and efficiency level. Given the nature of the industry that AUFS is engaged in, it primarily requires office equipments and softwares that in turn translates into the level of efficiency in the comany. Currently the AUFS has a technology that is also employed by the HSBC and this means that the technology in the two companies is similar. The same state of technology will make it easy for the AUFS to work under the umbrella of HSBC in the UK as it does not need to get a new technology or train its staff on the new technology thus the possibility of the smooth running of the company’s operations in the UK on working with HSBC. The company’s prosperity is the UK is also reinforced by the fact that in two years ago, it installed and started using the System Applications and Products System (SAP), where SAP is a recognised leader in the software industry in providing collaborative business solutions for all businesses, more especially the banking industry. This will have an impact of streamlining operations, control and reducing of costs and the achievement of exceptional levels of efficiency.
viii) Customer Relationship Management
The company’s operations are customer oriented in it maximizing its profits and for that reason the monitoring of the customers’ behavior is important in enabling the company to make more informed decisions which are certain to impact the company’s performance positively and also on the fact that that the company will be operating in a competitive market where consumer choices are crucial. Given this conditions, there arises a need for the company to monitors the customer behaviours. The company will establish suggestion boxes which are meant to collect information from customers all over the UK, where this information will be used for decision making in ensuring customer satisfaction with an aim of both increasing the customer base and also retaining the already attained customers.
Timely questioners will be supplied to the customer so as to gather information about the extend to which the company services are satisfactory according to their measure and give them an opportunity to suggest on how they wish they were to be treated. This practice will provide information that will be used by the company decision makers on the possible practises that are likely to increase the capital base. The information contained in the questioners will also supply the management with information about the culture of various ethnic groups in the UK, which will enable the management to treat them in a preferential manner according to their respective wishes in the process of increasing the number of customers, hence increased returns.
ix) Enterprise Architecture and Auditing
The company will add a data center in the UK to the house of computer systems and associated components such as the telecommunications and storage systems, and this will be located at the HSBC Headquarters in London. The reason for locating it at HSBC headquarters is to reduce the costs of operations that shall include renting space, where this is a deal to be negotiated with HSBC.
The company’s auditing in the UK will be done in two phases where one will be an internal audit and the other one should be an external audit. Internal auditing should first start that comprises the a chosen team within the management and after that an external auditing should be done that is meant to review on what the internal auditing has done and make any necessarily recommendations. The auditing should be done in a specified period, that is quarterly on the establishment of the company in the UK, where the recommendations from previous auditing exercises are expected to be reconciled in making decisions.
- x) Personnel Strategy
Despite the superiority of the technology and the company’s infrastructure, the company requires a dignified staff for it to attain it goal in establishing branches in the UK. The quality of staff will determine the efficiency and performance level of the company. Therefore the company will invest in improving the performance its staff and this will be enhanced through the adaptation of a culture that will promote effectiveness, hard work and accountability. This will be ensured by the observation of various practises that include; balance of work and rest, assigning responsibilities according to the qualifications and the skills inherent in an employee, promoting teamwork, establishing friendly conflict solving practices, providing an attractive renumeration, encourage recruitment based on merit, provide incentives to encourage good performance and also provide training to the staff.
Detailed set of strategy recommendations with an implementation plan to resolve the Personnel Strategy.
Human resources are the most important resources in a company that determines the performance of other resources and also the general performance of the company. The impact of the human resources varies from quality to quantity depending on the technicalities that are involved in the industry, therefore various companies depending on the industry in which they are operating in require varied qualities and quantities of human resources (Swanson and Holton, 2001). According the requirements for the industry that AUFS is operating is that it require good skilled personnels who can handle the technicalities that are involved in the industry and also the need for customer care.
Human resources are expected to perform optimally when provided with an enabling environment and also developed to attain particular skills that will enable them to perform their tasks effectively. The enabling environment imply the incentives availed to employees that are certain to trigger them to exploit their abilities. Human resource development involve the offering of training to the employees in the process of instilling some skills in the employees which are certain to improve their performance as they are likely to approach work challenges an informed manner. In a joint consideration of human resource development and offering of an enabling environment for better performance the following factors will be addressed in ensuring good performance from the employees that will contribute positively to the success of the AUFS operations in the UK, they include;
The company should match the profile of respective AUFS staff with the expertise, skills and the abilities and this is meant to ensure that each and every employee is assigned a responsibility which he or she can perform better. This will be done on a timely basis an it will involve the evaluation of every employee performance as new talents are likely to be discovered while they are working on the projects that are entrusted to them. The employees are also to be provided with an opportunity to identify the area where they think they can work better and this should be guided by practical evidence showing the reasons why he or she thinks he or she can work better in some department and not in the other.
The company will avoid frequent nomadism of the employees from one department to the other and this meant to encourage specialization that will instill the benefits of learning from experience in the process of them increasing efficience in their performance. Specialization will enable the workers in respective department s to discover ways of handling tasks with much easy as it will be their daily routine to works on such projects. This is also an indirect strategy that is meant to encourage innovations within the company emanating from the deeper understanding of a given department’s operations that is likely to promote the company’s comparative advantage in the industry.
The structure of the organisation will be designed in some way that will enable the free flow of information across all the levels in the organisations and this is meant for the purpose of quick decision making. The free flow of information, and timely and effective decision making will be enhanced by the company structure becoming decentralized where the branch managers are expected to make the day to day operation decisions based of the standards set by the top management. Strategic policies will be developed by the branch managers will be approved by the top management at the country level in the UK before they are implemented and is meant to enable all the parties to involve in decision making. This practice will ensure timely and quick decision making and also providing the employees with an opportunity of feeling the sense of being part of the team that it required for the success of the company thus a motivational factor that promote accountability and also hard work among the employees of the AUFS company in the UK, hence an improved general performance that will ensure improved competence in the industry.
During the recruitment process of staff in the UK, the company will lay plans of attracting the most talented persons into the company’s work force which will in turn have an impact of improving performance. The UK labour is characterized by free labour mobility implying that it is the companies which provide the best returns on labor that are likely to attract the best talents, therefore the company will have to provide a reasonable renumeration that is meant to attract the best talents, who will ensure the company’s excellence in the UK.
The company will engage in training the human resources on the best practises that are in the industry as they occur and this will act as a form of updating the employees in ensuring good performance. The training will involve the invitation of experts in relevant fields and from various companies that are related to the AUFS operations to update employees on the best practises to improve their productivity. The experts from the companies that manufacture the softwares and the ad wares which are used in the company will be invited to talk to the employees on the best way to use the facilities if good performance was to be ensured thus improving their performance through the effective utilization of the technology. In conjunction to the human resource development the company will provide opportunity for the staff members who want to further their studies to get a leave or get assigned less work that will enable them to take their studies which much easy. This will encourage the employees to take further studies that is likely to improve their performance through the better understanding of their area of work that enables easy solving of challenges that arise during their operations.
The company will also initiate a scheme of encouraging good performance and this should be based on reward for the good performance. The rewards for good performance will include material reward and promotion to higher ranks in the management. The measure for performance will be based on the work load that one has handled over a specified period of time. On the branch level, performance will be measured according to the number of clients that the branch has attracted for a specified period of time and also the magnitude of the mortgage transactions handled by the branch. This is expected to promote a health competition within the company that will in turn ensure increased performance of the company. various branches will be competing to outshine each other and also individual employees will be competing against each other. The competition among the branches of the AUFS in the UK will promote the team spirit at the branch level.
The staff welfare should also be considered and this is meant to treat them as human beings with emotions in ensuring better performance. The welfares that should be considered in the first place is the working place where an employee wishes to work as this will seem to be convenient to the employees as they will work in places where they find it comfortable as pertains to the balancing of social life and work. This will save them from stressful situations which are certain to affect their performance at work. At some extreme situations the company will cater for medical expenses and provide accommodation facilities to the employees. Safety at the work place will also be ensured and also job satisfactions which will provide them with an incentive for exploiting their talents.
The company will initiate a retirement scheme that should be structured on the focus of retaining staff for a quite longer time in the company. The retirement benefits will be maturing at the end of a duration of ten years, implying that the employees will have right to access their retirement benefits in a duration of after ten years and for reason the employees will be committed to serve the company for a duration of not less than ten years. The benefits should also be attractive and should include a profit share. The profit share scheme will initiate the employees of the company to have a sense of ownership that will promote their attitude on how they consider work.
Swanson A. and Holton F., 2001, Foundation of Human Resource development, Berrett-Koehler, pp 14