Securing customers' interests through mutual ownership
A Nationwide case study

Page 0: Introduction

All businesses have owners. It may be just one person i.e. a sole trader, or thousands even millions of people e.g. the shareowners of a public limited company.All businesses also need decision-makers. Decisions may be strategic e.g. about the long-term aims of the business and its general direction. They may also be more mundane and practical e.g. should we be open on a Sunday? Sometimes the...
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Page 1: The changing market for building societies

Building societies have a long history of caring for their members. They encourage them to save and help them to buy homes by lending them money at affordable rates of interest over long periods of time. Until the 1980s the various operators in financial services concentrated on their own areas of expertise. Customers wanting banking services went to a bank; for insurance services they...
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Page 2: Organisational structure and objectives

Structure All organisations have stakeholders, but the number and range of stakeholders depends on the organisation's structure. Building societies and public limited companies such as banks all have employees, customers and suppliers among their stakeholders. Mutual organisations that convert themselves into public limited companies, however, create a new and very different stakeholder: the...
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Page 3: Creating a competitive advantage

Within a rapidly changing and highly competitive marketplace for financial services, organisations flourish by establishing a competitive advantage. This results from being different and distinctive in ways that matter to customers. Nationwide emphasises that it is 'proud to be different' : this is its strapline. The challenge then is to demonstrate to customers that Nationwide is different...
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Page 4: Measuring effectiveness

Key measures of Nationwide's effectiveness as a mutual organisation include the terms and conditions on which it does business with its members, who also form the overwhelming majority of its customers. During 2003/04, Nationwide delivered £588m by way of better value to its members. This consisted of £236m to savers in the form of better savings rates, £223m to borrowers...
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Page 5: Conclusion

As a business concept, mutuality remains alive and well. By playing to its strengths, Nationwide Building Society is demonstrating that, within the financial world, organisations which for strategic reasons, have made the decision to remain structured as mutual organisations are able to flourish. This is because they have the flexibility not only to provide a service to their members instead of...
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