Free Essay

Cash Connections

In: Business and Management

Submitted By Berdelle
Words 939
Pages 4
The economic characteristics are its contribution to the GDP of the country, employment, labor income (employee compensation), and tax revenues generated. Also the payday lending industry is very much affected by the customers’ economic standing and financial stability because this will reflect on the possible lending to be given Short term economics also affect the industry because the rollovers in price/interest rates tend to increase as transactions are renewed. The current economic status of the area should be taken into consideration, because the employee could pay for more than the initial principal.
Competition in the payday industry is very significant in assessing the industry's strengths and weaknesses. It increased due to the relaxation of federal restrictions which led to the entrance of new companies into the industry. These new companies then became competitions against well-established companies in the industry - one of which is Cash Connection.

The strongest among the competitive forces in the said industry in accordance with Porter's Five Forces Model is the Potential of New Entrants. Potential new entrants can help liquidate the market which would lead to lower demand in individual stores. The four other competitive forces also affect the overall competitiveness within an industry. The Threat of Substitute Products is the next strongest force; followed by the Competition in the Industry; the Power of the Buyers; and the last would be the Power of the Suppliers.
The driving forces that are currently affecting the payday lending industry:

A. The increasing cost of bounded checks and overdraft protection fees
B. the increasing cost of late bill payment penalties
C. Exiting of traditional financial institutions from the small denomination, small credit market
D. Product innovation (Direct deposit)
E. Decline of economy
F. Negative views about short-term lending
G. Saturation of competitors
H. Continuing trend toward regulation of the payday advance service

Location and being the first check cashing store in the area is Cash Connection's most important key success factor. Cash Connection has used this strategy to determine where it would open new locations in the past. If they continue this strategy, they will continue to gain a market advantage in new areas over competitors.

Another is providing additional services. Cash Connection will need to continue to provide additional services at their locations. They will be successful if they provide a one stop shop for many financial services such as financial consultation and tax auditing services. They will differentiate themselves from their competitors if they start to provide unique services.

With cautious customers, Cash Connection also have a courteous, honest, and personalized customer service when dealing with payday lending companies. If Cash Connection can make their customers feel comfortable, their customers could trust that they are not being taken advantage of and they will gain a consistent customer base.

Cash Connection’s strategy is characterizing itself from other competitors to gain the largest share of the lending industry, while still meeting customer’s needs and following government guidance and supervision. These strategy includes providing financial products and services to the unbanked and financially underserved customers and also to set themselves apart their competition with the intention of becoming the most dominant franchise in the lending industry. The lending industry was established to provide citizens in a financial crisis with quick cash loans while adhering to the rules of the industry.

Cash Connection is taking to broad differentiation strategy. They seek to create a competitive advantage by incorporating attributes and features that buyers consider his services more valuable. Successful differentiation will allow his firm to increase sales and increase brand awareness. A focused differentiation strategy is concentrating on a narrow buyer segment and out-competing rivals with a product offering that meets the specific tastes and requirements of niche members better than the product offerings of rivals. Cash Connection is taking this approach by offering attractive features to its customers that its competitors cannot offer. The different characteristics consumers find valuable when searching for a quick cash loan, such as lower interest rates, and larger loans have an impact on the consumer’s purchase decision.
There are evidences that suggest that Cash Connection’s strategy and business model are ethical and beneficial to customers and at the same time, to the society. Cash Connections is not breaking any legal laws which may lead people to think they are ethical, but the question is whether Cash Connection passes the moral test. Cash Connection as well as other lending organizations is taking advantage of the hard times of individuals wherein they have fallen, but at the same time the lending industry is beneficial in that it provides more than 150,000 jobs and contributes up to $10 billion to the U.S. gross domestic product. In our own opinion, payday lending is unethical and a poor decision for customers because of the high interest rates. Moreover, the cost of borrowing ends up with the customer owing more than what was borrowed.
A close following and recording of transactions and good research on the customer would allow for more ethical standards since, lending transactions would be more careful. Customers should be provided by enough knowledge in their potential transactions with the company, this may help provide better payment compliance which is good for both the company and the client. The company should see to it that they wouldn’t take advantage of financially challenged clients (which are the majority of their clientele), and interest rates shouldn’t be unreasonably high. Incentives for earlier/on-time payments such as interest rate reductions, better future dealings, and other company benefits would help build the company reputation just as the client builds theirs with the company.

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