Pursuing a growth strategy
A Northern Rock case study

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Page 3: Goals and strategies

Organisations need to have goals to work towards. We can think of the goal as the end to be achieved. The strategy is the means to achieve this goal.

Goals and strategies

For Northern Rock, the:

  • goal is a high-growth target
  • strategy is to achieve growth through having a low cost base
  • strategy consists of a number of elements that enable the business to achieve high growth.

Components of this strategy include:

  • ongoing investment in important resources - people (for example, by providing training and well-paid career paths), buildings and systems (including IT systems)
  • developing means of dealing with customers - for example, through Northern Rock branches, post, telephone and e-commerce
  • raising funds in different ways including from personal accounts (people like you and me), from commercial markets across the world and potentially, the option of selling more shares in Northern Rock.

In recent years, Northern Rock has been able to gain an increasing amount of funds from these sources, making the growth strategy possible as lending has steadily increased.

A useful parallel is to think of a highly efficient manufacturing company. Such a company would produce goods - for example, cars or chocolate bars - at a lower cost than rivals, whilst still giving customers the types of cars or chocolate they want. This is how Northern Rock has been able to grow so quickly. It is efficient, well managed and has lower costs than its rivals and is therefore able to lend money to borrowers at a relatively low interest rate.

Northern Rock | Pursuing a growth strategy