Page 2: Strategic review
In 1994 Northern Rock decided to undertake a strategic business review of distribution. A Review enables an organisation to find the answers to two important questions. These are:
- Where are we now?
- Where do we go from here?
Building societies today are completely different institutions from those of the past. Though the core business still remains as savings deposits andmortgages, Northern Rock now competes with a spectrum of financial services organisations across the whole industry. Whilst this competition provides a threat to Northern Rock’s core business, it also provides Northern Rock with considerable potential to develop new business opportunities. The key ingredient required for Northern Rock to follow through these business opportunities was having the right staff trained at:
- an individual level
- a job level
- a departmental level
- an organisation level.
An organisation must continually be assessing current states of employee development by adding value to human resources if it wishes to maintain or further develop its competitive advantage. Wherever the organisation introduces a new strategy or changes its objectives it must identify training and development needs which take it forward.
People and the channel of distribution
The channel of distribution is the system through which financial services are transferred from producer to end-user. It may consist of one or more individuals or organisations who help to make products and services available for end-users. In order to maximise sales opportunities an organisation must appraise existing channels. There are a number of main distribution channels through which Northern Rock reaches its customers. These are:
- Branches. These involve over-the-counter, direct contact with customers.
- Intermediaries. These might be agents or brokers.
- Sales teams. These work on referrals and may cross sell services.
- NR Direct. A NR Direct sales team works on retention and renewal.
In order for Northern Rock to assess how well it could react to new business opportunities and develop areas for further potential, it had to evaluate its internal capabilities. This meant using the Distribution Review to look at ways of reaching consumers wishing to purchase a wider range of financial services.
The Distribution Review showed that in order for Northern Rock to develop new business opportunities, it would need to develop both its direct sales and Northern Rock Direct. The Current Distribution Stance showed that although customer needs for many products were being served by the branches, major opportunities existed through direct sales and Northern Rock Direct.