Cash Connection Essay

1718 Words Jun 5th, 2011 7 Pages
Cash Connection

Payday Loans
Strategy, Ethics and Forces

1. What is Cash Connections strategy? * Differentiate itself from competitors to gain the largest piece of the $40 billion dollars of paid lending that the United States industry has to offer, while adhering to government restrictions and meeting customer’s needs.
Reference: Thompson, Peteraf, Gamble, and Strickland. P. (2010). Crafting and Executing Strategy: The Quest For Competitive Advantage Concepts and Cases (18th ed.). Page, C-114.

Which of the five generic strategies discussed in Chapter 5 most closely fits the competitive approach that Cash Connections is taking? * I choose a broad differentiation strategy as a best fit. Allen Franks seeks to produce
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Can all be taken into account when consumers are choosing or switching providers.
The threat of Substitutes-HIGH-Competitors with substitute products including banks with products/services like overdraft, Credit Card companies/banks with credit card offerings, employers who offer pay advances, and even Banks like Wells Fargo who are starting to offer payday loan style products called checking advance products.

I think that consumers will readily (gladly) accept these substitutes whenever possible. Advances from one’s employer are the best option but is not readily available to everyone. Overdraft is similar in pricing and many credit cards are as well. Overdraft is easily converted to cash when credit cards are harder to acquire cash from. Credit cards along with loans, lines of credit, home power lines of credit and mortgage refinancing are each increasingly lower in costs but are not as readily available as payday loans which is one of the reasons why there is a $40 billion dollar market. Plus, most substitutes are attainable with good credit while most payday loan companies do not require a substantial amount of information to obtain a cash loan from them. This with the extremely fast turnaround of one to, at maximum, a few hours until you receive cash in hand is another main reason the industry is so large. The text book discusses, in a 2004 survey by Cypress Research Group, 84% of customers who use payday loan
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