ans by neerjaur2


									BA&SC Exam January 2004
Summary answers to selected questions
Question 1 (a)

Business model                   USP >   solely internet based - unique - no branches
                                         part of skandia group - heavy
                                         Niche type business strategy - targetting only some customers
                                         no separate accounts - all in one
                                         generate compensating income via long term loans
                                         - car and home finance monthly capitalisation

Analyse it strategic position            Could use value chain model of Porter
                                         Could use SWOT
                                         Defining value

                                         customer strategy - the socalled "Mickey Mouse" diagram
Relationship with customers                    truthfulness, simplicity, high interest
                                         high interest rate - 2-3% higher than competitors
                                         low cost
                                         Claim to be customer led
                                         High functionality on internet portal
                                         call centre for complatints and problems
                                         on-line speed for credit

Clearly this is all central to
strategy - need to say so!

Question 1 (b)

Skandiabanken was set up "as a system" - not an organic organisation
In a sense, their strategy rolls out from their systems.
  *    Low cost
  *    Highly targetted and focussed
  *    Informal staff structure relies on the formality of the system
  *    Data mining for customer targeting
  *    Maintaining a simple user-friendly web-site
  *    Simplicity - staff using the same website as customers
  *    Customer suggestions collected and used.

Competitive advantage - probably use 5 force model
     *   Set up as an innovative "do better things" company
     *   But now must operate as a do things better company…

     *   Advantage not particularly sustainable - but early entrants are advantaged.

Question 2 (c)
 Ethical dilemmas

 Students should discuss the rights and wrongs of various rather than merely list
 or mention them. They get credit for linking their discussion to particular ethical principles
 eg Golden Rule

 The dodgy practices include:

                    electronic data gathering - it is surreptitious, far reaching, not necessarily in
                    customer interest
                    passing on customer details to their dealer network - invasion of privacy
                    bumping rich customers up the phone queue - unfairness
                    relying on an internet only business model - reducing the job opportunities –
                    if every one did it???
                    encouraging a false "collaborative" interaction between the bank and the customer
                                with the bank eg suggests they limit their withdrawals.
                    by claiming to be "truthful and simple" etc, the bank is setting itself up as
                    a moral entity probably on fraudulent grounds.

                              and security:
                                   They should consider the usual kinds of threat
                                                    > Denial of service
                                                    > Hackers
                                                    > Poor data
                                                    > Physical loss of computing power
                                                    > etc

                                   Should mention encryption as an important tool
                                   Also variable access profiles
                                   Denial of service - can only really have a contingency plan for
                                   what to do

3.       (a)    Yes, a favourable price, since the IRR is well above the required 15%

         (b)    Just a little better – NPV = £53380 compared to £45995
         (c)    Given the technology, the delay and reliability of the product are
                probably more important than the exact level of profits, provided these
                are above the 15% required.
4.   (a)    (i)      Interest = £2134
            (ii)     Interest = £2153
            (iii)    APR (a) = 6.660%
                     APR (b) = 6.715%

     (b)    (i)      The South West is the worst performing region – near 20%
                     worse than the North, which is best. Variability means lack of
            (ii)     Coefficients of Variability:
                             South East    =      21.4%
                             South West =         25.9%
                             North         =      41.0%

                     Lack of variability suggests a deliberate policy – in which case
                     SW and SE are fairly lax, given the policy ought to be 30 days.

            (iii)    On the obvious comparisons, the SW manager is performing
                     worst. Do they measure debtor days the same way? Are the
                     comparisons valid? Are the averages based on the same time
                     period? Perhaps his average is being lowered by historical data,
                     or by a single “rogue” point.
                     The obvious alternatives are median and semi-interquartile
                     ranges, which are not influenced by extreme (and possible
                     spurious or “rogue”) values.

5.   Not supplied.

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