INGDIRECT Case Notes - ING DIRECT Rebel in the Banking Industry CASE ASSIGNMENT Arkadi Kuhlmann has asked you to participate in a strategy session

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Unformatted text preview: ING DIRECT: Rebel in the Banking Industry CASE ASSIGNMENT Arkadi Kuhlmann has asked you to participate in a strategy session to discuss the competitive and internal challenges facing ING DIRECT. He has emailed you a copy of the agenda, which includes the following key items: I. Industry Competition II. Internal Resources III. Strategy IV. Organizational Design V. Growth VI. Relationship with ING Group VII. Leadership Knowing his reputation for directness, you fully expect to be asked your recommendations in each of these areas. To prepare, you should conduct Industry (Five Competitive Forces) and Internal (Value Chain) Environmental Analyses as well as provide a written summary supporting each of your recommendations. 187 ING DIRECT: Rebel in the Banking Industry STRATEGIC MANAGEMENT INPUTS Industry Environmental Analysis ING DIRECT is anticipating a new market phase in its industry: a period of increased competition, as existing competitors enter the direct (Internet) banking arena and attempt to capture market share. Conducting a Competitive Forces Analysis can reveal likely intensity of competition that the company will face and possible impact on profits and growth. Five Competitive Forces Analysis of Direct Banking Industry Competitive Forces Strength Comments New Entrants Moder ate Due to low barriers to entry (*see below), large competitors will be easily able to enter the market with commonly available information technology and adequate marketing resources. This entry will threaten potential market share (some of ING DIRECT's new growth opportunities), but is unlikely to attract its current account base, where the average saver is not likely to "shop" for better rates, unless the new competitors can offer significant increases in value. Supplier Power N.A. Buyer Power N.A. Product Substitutes L ow There is not really a substitute for the simple "product" of savings at a good interest rate. ING DIRECT's customer base is not looking for more complicated products, alternatives, or packages of services and features to enhance the product. Intensity of Rivalry Modera te Rivalry based on product, quality, and innovation is likely to become stronger. All banking concerns are seeking growth opportunities, and ING DIRECT will need to be constantly ready for changing conditions which might threaten its strategy and performance. 188 ING DIRECT: Rebel in the Banking Industry *Barriers to Entry Economies of Scale Low Some systems setup costs, but not a high cost structure offering economies for volume. Product Differentiation Moderate ING DIRECT will have some protection based on its differentiated approach to the industry. Capital Requirements Low Not a barrier, big banking competitors have available resources for investment....
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This note was uploaded on 01/06/2012 for the course MGT 4027 taught by Professor Stein during the Winter '11 term at Southeaster Oklahoma State University.

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INGDIRECT Case Notes - ING DIRECT Rebel in the Banking Industry CASE ASSIGNMENT Arkadi Kuhlmann has asked you to participate in a strategy session

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