Cash Connection

Cash Connection

1. What is Cash Connection’s strategy? Which of the five generic competitive strategies discussed in Chapter 5 most closely fits the competitive approach that Cash Connection is taking?

Differentiating itself from competitors and gain the largest share of the lending industry, while still meeting customer’s needs and following government regulations and restrictions. Cash Connection is taking the focused differentiation strategy as stated in chapter 5.

2. What evidence suggests that Cash Connection’s strategy and business model are ethical and beneficial to customers and to society at large? What evidence suggests the company’s strategy and business model are neither ethical nor beneficial to customers and that the entire payday lending industry has few if any redeeming qualities?

Cash Connections is not breaking any legal laws which may lend people to think they are ethical, but does Cash Connection pass the moral test is the question. Cash Connection as well as other lending organizations is taking advantage of the hard times individuals have fallen on but at the same time the lending industry is beneficial in that it provides more than 150,000 jobs and contributes up to $10 billion to the U.S. gross domestic product. The discussions in the case point to some opinions that payday lending is unethical and a poor decision for customers because of the high interest rates and the cost of borrowing ends up with the customer owing more then was borrowed.

3. What are the dominant economic characteristics affecting the payday lending industry?

The dominant economic characteristics affecting the payday lending are: government regulations and restrictions, Competitor saturation, and the current recession.

4. What are the strength ratings on each force that makes up Porter’s Five Forces Model? What do these strength ratings reveal about the overall attractiveness of the payday lending industry?

The threat of new entrants: The threat of new...