STO313

Student’s Name Course Professor’s Name University City (State) Date PART A: CASE STUDY DESCRIPTION Brief Background The case study, “Retail Banking Market Investigation”, is focused on examining the strategic approach and challenges experienced by Metro Bank in the United Kingdom (UK). In the year 2010, Metro Bank came into existence as newly penetrated high-street bank in the UK. The company initiated the servicescape by offering range of retail banking facilities to the personal and business consumers. The business consumers included Small-Medium Enterprises (SMEs) that require primary funds from banks in order to manage the corporate financials throughout a fiscal period. By the end of 2014, Metro Bank expanded its customer accounts to 447,000, which were marked at 8,912 in 2010. Through the deployment of a mass-market strategy of business penetration and rapid growth in the British consumer market, Metro Bank declared of owning more than 200 branches nationwide by the end of fiscal year 2020 (CMA, 2015). Primarily, the initial focus of Metro Bank was the consumers and businesses present in London. Based on a rational servicescape of deposit-taking and lending institution, Metro Bank anticipated success from London by providing utmost convenience and excellent customer service experience, before expanding business networks throughout the UK. Through convenience and customer service excellence, Metro Bank had a remarkable opportunity to accomplish sustainability in early stages and provide audience with an availability of easy banking choice (CMA, 2015). However, the company experienced few strategic challenges over the period, which requires retrenchment solutions for overcoming the growth obstacles while distributing the servicescape significantly. Discussion Strategic Problems The primary strategic problem experienced by Metro Bank was related to the business entry in the British consumer market. According to Levine, Bernard and Nagel (2017), barriers to entry is a primary challenge experienced by newly formed businesses, particularly in the service market. The barriers to entry require businesses to utilize strategic intelligence and allocate resources for avoiding unnecessary operational halts. In the case of Metro Bank, acquisition of banking license was a critical challenge during the market entry level. Over the century, the British government avoided providing authorization to the newly formed banks and ensured that Financial Services Authority (FSA) is navigating the operations at a gradual pace (CMA, 2015). Considering the inclining competition in the banking sector, Metro Bank had a noticeable challenge in the early stages. The probability of altered business approaches and objectives was higher as compared to existing competitors in the sector. Besides, the involvement of FSA weakened the control of governance bodies over the desired strategies significantly. The second strategic challenge encountered by the Metro Bank was during the expansion of business networks. As specified by Meijer (2015), business expansion denotes the proactive and strategic developments within an organization based on the changing market dynamics. Similarly, Verbeke and Asmussen (2016) stated that the expansion strategies are necessarily required by businesses to increase profitability brackets within a particular sector. A barrier in expansion strategy of a business would limit financial viability, which is important for overcoming to secure sustainability in latter stages of operational lifecycle. In the case of Metro Bank, expansion was another challenge operating in the British consumer market under FSA and Bank of England (BoE) standards. Due to authorization limitations in the initial stages, Metro Bank was unable to make critical investments on infrastructure developments and business networking since 2013. Until 2014, Metro Bank was aiming to invest in service mobility, which required restructuring of information technology (IT) deliverables primarily. However, the authorized restrictions posed by BoE and FSA halted Metro Bank in making strategic changes for securing industrial growth (CMA, 2015). The discussed strategic limitations were critical for determining the operational sustainability in the British banking sector. Regardless the convenience offered to the customers, such as operational timing 7 days a week and walk-in banking service (Metro Bank, 2019), a sustainable expansion was a challenge for Metro Bank since 2013. Unlike stable competitors like Hong Kong and Shanghai Banking Corporation (HSBC), Barclays, and the Royal Bank of Scotland (RBS), Metro Bank became a victim of authorization that was declared by FSA and BoE in 2013. As a result, the strategic investments or considerations of the company remained under question since the initiation of operations in the year 2010. Strategic Solutions to the Problems In the provided case, it is evident that Metro Bank had a wrong market entry strategy, which holds influence over the expansion aspects of the business in latter stages. As a result, the company should overcome the challenge by redefining the market entry strategy. First consideration for Metro Bank is Joint Venture (JV). JV allows an organization to collaborate with different parties that hold immense experience in terms of infrastructure and market experience (Hollender, Zapkau and Schwens, 2016). Moreover, new companies or SMEs would experience early profitability through JV by collaborating with leading entities in the industry (De Villa, Rajwani and Lawton, 2014). In the case of Metro Bank, JV would serve as a suitable entry strategy. Through JV, Metro Bank could integrate with prime players in the British banking sector, like HSBC and RBS, for overcoming the authorization challenge raised by BoE and FSA. Since the regulations are not implied on such banks, it would provide Metro Bank to mitigate control limitations over the business strategies. On the contrary, Metro Bank could opt for Greenfield strategy for expanding the business. The Greenfield approach is the collaboration of operations with an entity established for a longitudinal span in the local market, allowing new businesses to reach emerging industrial segments easily (Anderson and Sutherland, 2015; Chen et.al, 2016). Through Greenfield approach, Metro Bank could gain additional access to the market segments, such as investment banking and related services, which is not evident in the existing scenario. The Greenfield strategy would increase the market reach by diversifying the current servicescape portfolio of the company followed by an additional support from an experienced player in the British banking sector. Strategic Management Questions 1 Had there been a launching error in the Metro Bank strategy? 2 Should Metro Bank consider Greenfield strategy during expansion or re-launch with JV approach? PART B: TEACHING NOTE Case Synopsis The focused case discussed the st...