A business model is considered to be a plan that is made by companies with the aim of generating revenues and making profits. It explains the kind of services and products that businesses plan to manufacture and also market, and how they plan to do so, including the expenses that they would incur. There are fifteen business models and every business is classified under one of them while taking into consideration the products and services that it sells, the approach that it uses to reach the customers, and also the role that the businesses play within the market setting ( Osterwalder, 2010). For example, the Federal Deposit Insurance Corporation or the FDIC is often considered to be a service business model.
Reasons for Considering the FDIC as a Service Business Model
The Federal Deposit Insurance Corporation or the FDIC insures deposits in the United States against the risk of bank failure. It was created in the year 1933 so that it can maintain the confidence of the public and encourage stability in the country’s financial system through encouraging sound banking practices. By the year 2016, the FDIC was insuring deposits of up to $250,000 in every institution. The FDIC is considered to be a service business model because it provides insurance service while at the same time it gives information on the best banking practices. It is vital to note that, a service business model aims at using services that are information-rich as the main offering or in a combination of the traditional products of the company with the aim of delivering customer value ( Kaplan, 2012).
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FDIC Mission and Vision
The main mission of the FIDC is to prevent the scenarios that were seen in many banks during the great depression. In particular, before the FIDC, there were no guarantees of depositors’ funds beyond the stability of a bank. It means that only those who were first in line to withdraw their money from the banks that were troubled would be able to get it while those who waited were at the risk of losing their life savings. More specifically, its main mission is to maintain public confidence and stability in the financial system of the nation by insuring deposits, managing receiverships, and by making large and complex financial organization more resolvable (The Federal Deposit Insurance Corporation (FDIC), 2017). In addition, it fulfills its mission by supervising and examining the financial institutions to ensure that there are safety and soundness and also consumer protection.
The vision of the institution is to remain a recognized leader in the promotion of sound public policies and addressing any risk that affects the financial system of the nation. It also aims at remaining the leader at carrying out its responsibilities that include supervisory, resolution planning, receivership management responsibilities, insurance, and resolution planning. In addition, the main values of FIDC are to maintain integrity, competence, fairness, accountability, teamwork, and effectiveness so that it can provide the services that are much needed by its customers. It also ensures that the customers have the peace of mind knowing that their money has been secured and they will not experience the shock that was seen among people during the great depression.
How the Vision, Mission, and Objectives of the Company help FDIC Gain a Competitive Advantage
The mission, vision, and objectives of the organization are mainly aimed towards protecting depositors from the negative effects that come with failed banks. It helps the FDIC gain a competitive advantage or in other words, an advantage over other institutions in the same market because it provides a unique service that is desperately needed by depositors who have been had reasons to panic after the great depression. Now with the service that the institution provides, customers do not have any reason to panic even when financial institutions experience hard times. The amount of deposit that is covered by the FDIC of up to $250,000 is favorable to many customers.
Company Strategy
Objective evidence is considered to be information that is based on facts and which can be proved through observation, measurement, and analysis. Objective evidence can be evaluated and examined using the tests of a winning strategy such the goodness of fit test that analyses how the strategy is matched with the situation of the firm (Kakkar, 2009). The second test is the competitive advantage test that analyses if the strategy helps the company gain and maintains a competitive advantage. Finally, there is the performance test that analyses if the strategy boosts the performance of the organization. Considering the three test, it is evident that the mission, vision, and objectives of the company support its strategy mainly because it is in line with the strategy of the institution to maintain its competitive advantage.
Conclusion
Companies often have different business models to choose from based on their activities. In this case, the Federal Deposit Insurance Corporation or the FDIC is often considered to be a service business model because it mainly deals with services. More specifically, it aims at insuring the depositors’ money so that they do not lose it in cases where the bank falls. The institution has gained a competitive advantage because it offers a unique and much-needed service after the great depression. The competitive advantage is father supported by the mission, vision, and objective of the institution.
References
Kakkar, Arjun. (2009). Small Business Management: Concepts & Techniques for Improving Decisions . Global India Pubns.
Kaplan, S. (2012). The business model innovation factory: How to stay relevant when the world is changing . Hoboken, New Jersey: Wiley.
Osterwalder, A., & Pigneur, Y. (2010). Business model generation: A handbook for visionaries, game changers, and challengers . Hoboken, N.J: Wiley.
The Federal Deposit Insurance Corporation (FDIC). (2017, 09 22). Mission, Vision, and Values . Retrieved from The Federal Deposit Insurance Corporation (FDIC): https://www.fdic.gov/about/strategic/strategic/mission.html
