Mountain Bank

Mountain Bank Case Study

In order to achieve competitive advantage, Mountain Bank needs to work on its existing four lines of business instead of expanding into any new area. This is because if it concentrates on the currently served markets, it will find room for improvement that would help the bank gain competitive advantage without eroding its profits or using its financial resources.

The one most important strategy that it must adopt is to improve its deposit volume. We learn from the case study that Mountain bank doesn't find checking accounts very profitable but we know that they can be turned into highly stable source of income if correct strategies are implemented and deposit growth is one such strategy. (Zagha et al. 2005, p. 206)

For one if the company gives its customers some incentives for using their checking accounts for direct deposits, this would make Mountain Bank their primary bank which in itself can turn out to be a highly favorable change for the bank

Second, with direct deposit customers, the bank can enjoy the benefits of cross-selling

There is very volatility rate with direct deposits and they are highly stable source of income

The company needs to attract its customers with attractive offers that may include:

Reduction or waiver of maintenance fee if checking accounts are used for DD

Reduction or waiver of fees if debit cards are used more frequently

More attractive credit offers focusing on niche markets like small businesses and underserved ethnic groups

ANSWER 2

Tellers are employees and hence the bank needs to have a good HR plan for growth and empowerment of its employees like any other organization. First the bank must understand that it cannot discriminate on the basis of race, color, religion or gender. It can become a more attractive place for employment if there is a competitive compensative package. Tellers would find themselves more motivated if they know that they are being paid just as well as any other teller working in any other commercial bank. This kind of knowledge helps in keeping the team motivated.

Second, there should be a good bonus plan too. Bonus works as an additional motivation factor and tellers would feel more focused if they know their efforts will pay off. There should be a good system in place to check who is performing at their peak, who is the most courteous with customers and who is going beyond the call of duty.

It would also help if age or physical disability is ignored as long as performance is good. We must understand that there are some marginalized populations that if treated properly can make any organization stand out from its competitors. This strategy can be used to keep the entire team happy, focused, and loyal.

ANSWER 3

Internal cost refers to the costs incurred by an organization internally on basically running the business efficiently. Mountain bank can conduct an internal cost review to see if there are ways in which it can remove excess costs. One area could be internal overheads like use of energy resources at various locations. Bank often consumer more energy than most other small organizations because they need to keep the area well lit during service hours and also need to light up the ATM section after hours. This can be minimized by the use of more efficient and less expensive energy alternatives.

External costs refer to procurement of material and supplies from the outside and also advertising costs etc. these can be minimized too if banks can find cheap advertising alternatives like online advertising and print advertising and use electronic media sparingly.

Internal differentiation refers to better use of value chain. We must understand that banks like any other organization have a value chain which includes variety of internal strategies that offer value to a customer. This chain can be reviewed, analyzed and enhanced in order to create healthy differentiation. In other words, customers need to know why they are choosing this bank over others. Does it offer more value in terms of good customer service, lower fees, quick resolution of fraudulent transactions etc. In order words, all value enhancing activities should be carefully analyzed and the company must work on improve value for the customer by allowing quick and better service than its competitors. (Donelan, 1998)

External differentiation mainly refers to the way an organization chooses its employees and gets the best of them. The bank needs to make use of enlargement strategy in order to save costs and allow employees to feel less bored with routine jobs. Tellers can feel very frustrated by doing the same task over and over again, with enlargement, the scope of their job related activities can be increased and this would make them feel more motivated, more focused and less robotic (Lawler, 1969). In short, a happy employee means a happy customer.