Pursuing a growth strategy
A Northern Rock case study

Page 1: Introduction

Northern Rock is the eighth largest bank in the UK by market capitalisation. In other words the value of the shares in the business. Its main business is residential mortgage lending. It also carries out other lending activities, such as commercial and personal lending. In addition it offers insurance protection, in conjunction with its insurance partners. On the funding side of the business...
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Page 2: Company growth

All organisations need to have objectives - the end purposes the organisation seeks to achieve. For example, a common business objective is to make a profit. Northern Rock's main objectives are to grow profitably, drive down costs to improve cost efficiency, and delivering a good return for shareholders. By expanding profitably, it is best placed to give its customers what they want...
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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. 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...
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Page 4: Strategies and stakeholders

For a strategy to be successful it needs to be: Feasible. Northern Rock needs to have the right resources, in particular the funds. We have already seen that the company has the resources to support growth. Acceptable for the stakeholders. Different stakeholders will have varying expectations, as shown in the table. Northern Rock is the lowest cost producer in the banking industry in...
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Page 5: Communicating with stakeholders

It is not enough to have a winning strategy; it is also important to communicate what you are doing. There are a number of ways in which an organisation can communicate. One approach would be a top-down method where messages are sent by a company to its stakeholders - shareholders, employees and customers - with no possibility for feedback. Communication would flow along a chain from the sender...
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Page 6: Conclusion

Northern Rock provides a good example of a growth strategy within a company.  The key driver enabling growth is having a low cost base. This allows Northern Rock to generate high profits and to expand its asset base. By working closely with stakeholders, and delivering its goals, the company has been able to give customers good products and service and employees good job opportunities...
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