Introduction
The financial service industry has been a very competitive one as a result of the improved technology. Besides, this industry has many players which include banks that usually engage in the management of individuals' and institutions' money. The sector of financial services has companies such as banks, credit card companies, brokerage, and insurance companies as well as wealth management companies. The financial industry tends to be affected a lot by the economic cycles. Currently, the financial service companies seem to be increasing quickly out of recession as the interest rates are low. The financial service companies usually look for the undervalued economic opportunities at the period of depression because the stock prices are low, then later sell it at the late stage when the prices are high hence making a lot of profit. The current global economy is in recession. Thus, the financial service companies are competing stiffly on purchasing the financial investments which in future will be the primary source of their profit. People's United is one of the dominant leaders in the financial service industry because of its qualified personnel, experience as well as financial strength.
People's United Bank is under the People United Financial, Inc which mostly engages in saving and loan holding as well as in offering financial services to its customers. It has more than 400 branches located in Connecticut, Vermont, New York, Massachusetts as well as New Hampshire (Gangahar, 2012).
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Company vision, mission and value
People’s united Bank has no specific vision and mission but, it has guiding principles and values which ensure it operate effectively. Its employee strives and work together to provide outstanding services to the clients as well as ensure caring partnership with the communities they operate within. Therefore, the guiding principles act as promises to the customers on conducting the business well. Some of the values of the People’s United Bank include integrity, collaboration, trust, positive attitude, courage, empathy and inclusion as well as work Ethic. Hence, as the principle represent the mission and vision of the company, People’s United Bank have committed to take care of the customers, give outstanding solutions, ensure success and form good partnership with the community.
Major Strengths of People's United
The company has a lot of advantages which help it in having great power to compete with other. The company has a strong brand portfolio which is very important especially at the time when the organization needs to expand or start offering other new products. Besides, the company has a high level of client satisfaction as it has a customer relationship management department. Customer relations is one of the People's bank strength which has enabled it to build a strong customer base and excellent brand equity which attract potential clients. The company is very successful in the aspect of executing the new project as well as generating return expenditure. People's United Financial, Inc has superb performance in the new market because of the strong expertise it has created over time (Gangahar, 2012). The new market is significant as the company can afford to have a new revenue stream. Furthermore, the company has sufficient automation of its activities which enables it to deliver quality services and can be able to scale up and down basing on the demand condition in the industry. It has integrated with a lot of firms especially the technology companies and, it has a consistency cash flow. Furthermore, the daily inventory of the company is much higher than that of its competitors hence it is raising more money to invest in its channels
Weaknesses of People's United
Some of the shortcomings in the People's United Financial, Inc indicate areas which need to be improved to make its competitive advantage stronger. These weaknesses include high attrition rate on its labor force. It makes the company spend more on training together with the development of its employees compared to its competitors. The company is noted to spend a lot on research and development as it has not been able to compete with other on innovation (Gangahar, 2012). The company has poor product forecasting which results in wastage of opportunities. There is less focus on innovations thus the company needs to put more investment on new technologies to reach its visions. Besides, the profitability ratio together with the net contribution of the company is below the industry average thus needed to improve.
Opportunities
The company has a chance of adopting new technology that can enable it to differentiate its pricing strategy in the market and maintain its customer base or attract new customers with its exceptional service. Besides, there is an adoption of a government free trades agreement as well as new technology standard that has offered the company enormous opportunity to be part of the new emerging market. The online platform that the company has been investing on has enabled it to open new channels and, such approach can be used in future to know more about the customer and to ensure accomplishment of their needs by use of data analytics (Gangahar, 2012). Additionally, the existence of low inflation rate results in market stability which provides the customers a chance to acquire credit with a low-interest rate.
Threats
Some of the risks which the company face includes: lack of regular supply of the innovative brands compared to its competitors. Therefore, while the People's United lack a steady supply of new products, its competitors are developing unique brands. The competitors together with market disruptors are developing new technologies which raise a severe threat to the future of the company (Gangahar, 2012). The number of the players in the industry has also increased massively because of the substantial profitability experience hence making the competition a lot more intense.
Company's Current Competitive Strategy
The People's United Financial which is the holding company for the People's United Bank has a unique competitive strategy of diversifying its operation and expanding its territories. For instance, this company has over 400 branches of People's Banks, commercial banking offices, and equipment leasing office in New England and in New York, investment and brokerage offices as well as supermarket branches. The Bank also engaged in retail and commercial banking services, wealth management, insurance services and brokerage business as well as bank offer trust. All these operations give the company significant customer base which enables it to have increased profitability and competitive advantage over other players in the industry (Porter, 1996). Diversification is an essential competitive strategy for the company's current situation because it is in a process where it's trying to develop a new product which will receive a positive response in its market. One of the bank's weaknesses is innovation.
People’s United Bank’s competitive advantage
The People’s United Bank has over 400 branches, 600 ATMs as well as 5,000 employees in diverse areas and a call center operation. It ensures that ensure that they invest in human capital and mechanization to be able to reach and have more power. The branches, expertise and huge number of employees ensures that the People’s United Bank offer expertise in commercial banking, brokerage, wealth management, consumer as well as business solutions. All these expertise in different field of service provision has enabled the People’s United Bank to receive more than 42 awards intending to honor their distinguishing quality service. Besides, People’s United Bank offers breadth of product and services to the customers. All these act as it competitive advantage on the industry.
Therefore, opening more branches and diversifying its operations will ensure that it can reach more customers and have a substantial competitive advantage. Branches of the People’s United Banks are many to an extent that they are able to have large customer base which is strong. Besides, the People’s United Bank engage in establishing community foundation, charitable contributions, volunteer actions and offering sponsorship. They also engage in financial literacy workshops. For instance, in 2017, People’s United Bank participated in more than 800 financial literacy workshops aiming at educating the community. Thus, this proves that they are reliable and makes them seem unique from others. It enables the company to be close to the niche of its customers hence serving them faster and more effective. The competitive advantage of the company ensures that all the guiding principles are meant.
Alternative Strategies
The company can adopt alternative approaches which can ensure that gets market power and be a leader in the industry. First is adopting the business strategy which emphasizes on the company defining its vision, mission as well as value statement and always working toward it (Kaplan, & Norton, 2007). A company with strength on the three aspects remains typically consistent and ready to compete in the market.
The second aspect is adopting the corporate strategy which emphasizes on the company's corporate actions which aim at achieving its objectives while still attaining competitive advantage. The corporate strategy entails an approach where the company creates a long-term vision by building a corporate value as well as motivating the workforce to ensure that the customers gain satisfaction (Porter, 1996). For instance, the company can implement the cost leadership strategy whereby it allows the client to pay for the services and goods as per their will.
Finally, the company can adopt the functional strategy. It is an organizational plan which is concerned with human resources, research, development as well as marketing among others. Operational approach is used to support a corporate together with business strategies (Collis &Rukstad, 2008).
Five Forces Impact on People's United Bank's Competitive Advantage
The five competitive forces help the People's United Bank to have an understanding of the structure of its industry hence enabling to identify a point that is more profitable but with less vulnerability. Michael Porter suggests that a company can either consider focusing on operational efficiency or the quality of their product to gain a definite competitive advantage. The People's United Bank has chosen to have operational efficiency while still improving the quality of its products and services. It is proved by the report from the company bank press room on January 21 st 2016 where the report point out that the bank is evaluating on the most effective way to serve its customers as well as improve it operating efficiency. For instance, the company sold its payroll service business to its current payroll software licensor where it was able to enter into a long-term agreement. The sale intended to offer high-quality payroll solution which has a comparable cost as well as minimal transition impacts.
Besides, differentiating its operations and being cost leader to its customers as well as being close to its clients ensure that it gains more competitive power compared to most of the companies in the industry. Therefore, the threats to the People's United Bank are low, while that of Substation is high because of online lending as well as micro-lending. This is because, besides the fact that its competitors might have more innovative skills and new products, People United Bank is near to the customer and can provide services and products which will leave them satisfied. The bargaining power of the clients is low because the bank branches proportion to the customers is high. The bank is more concentrated or readily available to where the customers are and its employees have more knowledge about the product they sell so they can easily persuade the clients. Besides, it’s hard easy to remain been a client of the People’s United Bank than moving to another bank for the same service making the bargaining power of the supplier (bank) high a factor that results in significant competitive advantage (Porter, 2008).
Hence, at the moment, the People’s United Bank has reached at the frontier where it has to either choose on the quality of the services they offer to their client and the community or been operational efficiency. Therefore, the Bank makes sure that what it delivers to the customers is of great quality and unique compared to all other products and services in the financial industry to gain more competitive advantage. Hence, focusing on innovating and providing better product and services will help them to beat their competitors.
Conclusion
In summary the competitive advantage of People's United Bank's is strong besides the fact that the top competitors remain to be Td Bank, Bank of America Corporation as well as Citizens Financial Group, Inc. The current competitive strategy of People's United is useful, but it should consider other alternative approaches which can make its operations more effective and profitable as it will gain a more competitive advantage. The paper discussion is based on the current state of the financial industry, the strengths, weaknesses, opportunities as well as threat facing People's United. This paper also highlighted aspects concerning People's Bank current competitive strategy, alternative strategy and the impact of the five forces of competitive advantages.
References
Collis, D. J., &Rukstad, M. G. (2008). Can you say what your strategy is? Harvard business review, 86(4), 82-90.
Gangahar, A. (2012). People’s United Bank. In Banking with Integrity (pp. 129-140). Palgrave Macmillan, London.
Kaplan, R. S., & Norton, D. P. (2007). Using the balanced scorecard as a strategic management system. Harvard business review, 85(7-8), 150-+.
Porter, M. E. (1996). What is the strategy? Harvard Business Review. Published November.
Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard business review, 86(1), 25-40.
