c



The case looks at; E-1, ³THE FOCUSED BANK´, which is a joint venture formed between two
banks that provide outsourced financial services to the New York financial sector. Initially their
strategy to the market was to be an early entrant in the North America ÷
  retail banking sector,
with a projected cash flow realizing profit after the first five years of business. However, due to the
banks overall value proposition (Operational and Market) and external market factors the firm
realized a slow start in its first year of operation. The firm however grew rapidly due to the use of
÷

 offering to the market; lower loans and higher savings, and     in the form of
dependability.
The financial market sector targeted by E1 was a booming sector due to the increase in the use of e-
business tools which was another contributor to the initial success. The benefits of the increase in the
use of technology however provided side effects for e1. Due to the market structure of the e-business
market (perfectly competitive), competition increased rapidly and this included larger banks with
greater resources as competitors to e1. This resulted in a reduction in the rate of customer growth for
e1 pushing them to set sights on a new potential market niche ³Corporate Services´.
This market offered similar benefits as did the online retail market in its initial stage such as the first
move advantage, opportunities to compete on cost and quality, and the potential of available demand
for this type of service.
The firm ventured into the corporate services market and launched their pilot project expanding
operations after 6 months and thus establishing a reputation for themselves. The firms New Product
Director and Marketing Director saw further opportunities to invest and expand their business
provided they could build strong relationships with customers, increase staff compliment, and
improve facilities and resources need to meet the requirements for a competitive advantage in the
corporate services financial business. The firms Operations Director however saw implications in
achieving the market requirements and opposed the investment proposition resulting in differing
views within the firm¶s top management.
  ÷
 
1.Y Could E1 use a similar strategic intent in the Corporate Services market as was used in the
online retail market, reaping similar success and sustaining that success?
2.Y Given the availability of their current resources could they meet future demand?
3.Y In terms of scalability of their operations would it be profitable to increase the market
segment by including a wider variety of products? What are the benefits of widening the
product offering to include additional services?
4.Y What are the advantages and disadvantages of entering such a market from the view point of
the risk of the new and viability of the new venture?
5.Y Since they did not possess unique core competencies in the service they offered hence the
opportunity for competitors to easily imitate, could they develop a sustainable strategy needed
realize the potential growth opportunities?
6.Y What are the effects of moving from a simple market value proposition to a unique value
proposition?
R  ÷
c÷  ÷

1.Y Develop strategic alignment by using their core strengths of developing a tightly defined
operational and market proposition which ensures their new corporate customers contribute to
the ongoing operating profit.
2.Y They could enter the new Corporate Service market but maintain the simple proposition by
not offering the wide variety of products (Focused Strategy).
3.Y They could look at implementing a substitute for strategy approach by adopting a new
approach to managing operations rather than the traditional such as TQM, Lean Operations,
SIX SIGMA, Business Process Reengineering and Enterprise Resource Planning.
4.Y Given the risk inherent in investing or expanding in this segment of the financial market, they
could exercise an ³Abandonment Option´ (A Financial Project Evaluation Method or Real
Option) which would result in them abandoning the project if operating cash flows projected
turns out to be lower than expected which could result in an increase in expected profitability
and lower project risk.
Ev  ÷
÷R  ÷

Y By developing a sustainable alignment E-1 will continuously reconcile their operational
resources with market requirements so that there is an approximate degree of ³fit´ &
alignment between them. When alignment is achieved the firm¶s customers do not need or
expect levels of operations performance which it is unable to supply. 
The task of achieving alignment can be approached in two ways. Firstly, E1 can seek to use
their existing market requirements and then align its resources to match them. This approach
has a number of intrinsic advantages, not least of which is sheer availability of practical tools
and techniques for classifying and identifying market requirements. This approach falls
neatly into the traditional top-down hierarchy of strategies where by operations role is to
support predetermined market decisions. The alternate approach to this is for the operation to
analyse its resources and then seek market opportunities that align well with it. Such an
approach would start with a formal statement of market positioning form E1¶s understanding
of the corporate service market segment and the activities of its competitors. Following on
from this, generic operations performance objectives would be used as a device to translate
market positioning into statement of market requirements which was understandable and
useful to the operations. These objectives would influence the various operations strategy
content decisions which in turn, over time, shape the operations capabilities.
rY