Cash Connection

Cash Connection

Cash Connection’s overall strategy is to provide payday loans to lower and middle income individuals. Cash connection offers two purposes to check cashing and payday loans. It provides loans to individuals until they receive their next pay check. Most banks won’t loan money to lower class individuals but cash connection will. Its overall grade would a “C” at around 75% satisfaction. The writer thinks that the best competitive strategy for Cash Connection would be the second one-Focused (Niche Market) Strategy. Concentrate on narrow piece of market (lower income).
The writer thinks that the business and strategy model is unethical. Most borrowers are on a fixed income or in a low income bracket with bad credit and can’t borrow money from a banking institute. When a borrower borrows money, they don’t see the small fees and high interest rates attached to the loans or just do not care. Nearly all of the payday loans stores are in low income areas. Payday loan services only target the low incomes families. They don’t target higher income families and one won’t find a payday store in an upscale neighborhood or area.
“The payday lending industry supports over 155,000 jobs nationally and contributed over $10 billion to national GDP in 2007. The payday lending industry helped to generate over $2.6 billion in federal, state and local taxes; $775 million were taxes on production and the remainder were corporate and personal income taxes.” IHS Global (2009, para 2).
Michael porter’s five force models are existing competitive rivalry between suppliers, Threat of new market entrants, bargaining power of buyers, Power of suppliers and Threat of substitute products (including technology change). In the payday lending industry the competitive rivalry is unlimited. It seems that there is some type of payday loan service on every corner. Especially, in the low income and section 8 housing areas. The payday loan industry has the power of supply. They supply loans and money to...