Case Study Paragon Group of Companies

Section 1: An analysis of the company's strategic position

Overview of Paragon Group

Paragon Group is a specialized Group of Companies which are providing a range of products and services to their consumers. The company is listed in FTSE 250 company. The FTSE 250 Index is a capitalization-weighted index consisting of the 101st to the 350th largest companies listed on the London Stock Exchange (Paragon, 2019). It is providing mortgage lending services while the company is also providing renting services to students. There is a separate banking group of Paragon which provide loans to consumer on behalf of third parties. Further the banking products are categorized into personal loan, mortgage and corporate loans.

Being a consultant of this company I have been asked to study and analyze client requirements and propose a strategic analysis of the company. Using this analysis I am required to provide recommendations along with tools which will be required for implementing the suggestions. The prime focus of this study is to understand the traits required by an individual for becoming a successful leader.

1. Tools and Techniques to analyze the Internal and External Environment of the Company

What is Strategic Position

Scholes and Johnson (2005), defined a strategic position as “An organization’s position that is concerned with the possible and predictable impact of company’s resources, competences, external environment and stakeholder influence on the company’s strategy. The consideration of strategic capability, environment, political and cultural framework and expectations all together provides the basis for understanding the strategic position of any organization (Scholes, 2005).”

It is necessary that organizations should assess their current strategies to make sure that they are suitable for the desired strategic position. This is because the strategic positioning reflects the choices of an organization that they opt for creating value for their customers; which will differentiate them from their competitors. The choices will be based on the company’s strategic actions. The figure below demonstrates the components of strategic position and what strategic actions it calls for.

Strategic Position and Strategic Action

Figure 1: Strategic Position and Strategic Action, Source: (Ries, 2003)

So, basically it makes up the significant part of organizations management and indicates the strategic actions that the management must take to implement.

Key Aspects of Strategic Position

There are three key aspects of strategic position identified by researchers which have a strong influence on organizational strategy (Galal, 2014). These include:

  • The organization’s external environment
  • Strategic capability in terms of competences and resources
  • Stakeholder influence as well as cultural and ethical values

The real art is to comprehend the strategic position of a company through developing meaningful linkage between the aspects mentioned above. The knowledge that how they change over time and can be integrated with the overall organizational strategy for creating value is crucial. Scholes (2005), stated that a successful organization finds its way to operate by managing their resources, competences and environmental forces to benefit their stakeholders as well as to gain benefits from them. The crucial step is to consider all these aspects and develop an effective strategy. To analyze the strategic position of the selected organization analysis of its internal and external environment is conducted by using appropriate tools. The SWOT analysis will be used for assessing the internal environment while PESTLE will be used for evaluating external environment analysis for comprehending the company’s position.

A. Internal Environment Analysis

SWOT Analysis

For analyzing internal organizational environment SWOT analysis was conducted. It is a strategic methodology to analyze an organization’s Strengths and Weaknesses that they possess and Opportunities and Threats that they face in the macro-economic environment. This is a widely used analytical tool utilized by organizations all around the world because it provides an insight into the external and internal factors that can affect the operations and performance of any organization (Porter, 2017). Analyzing such factors helps the management to address any issues related to these factors and optimize their performance accordingly. In addition, it also provides the information about possible opportunities that a company can avail and manage their competition by minimizing their business and policy-related risks.

SWOT analysis of Paragon Group of Companies

Strengths

1. One of the major achievement of the Paragon Group was the acquisition of Britannic Money. This allowed two main buyers to let lending companies create an attractive sector for a niche. This also allowed them to avail growth opportunities through joint venture and save cost.

2. The company holds a reputable status of excellent customer services and facilities (Böhm, 2009).

3. Deal in great business magnitude with assets around £10 billion and have more than 40k customers which give them a competitive advantage.

4. Possess strong position in UK mortgage and banking sector.

5. The banking group of Paragon has helped the company in penetrating various customer segments (Sarsby, 2016).

6. Paragon banking group has introduced product mix options which have proved useful for customers who were looking investment options in Consumer Financial Services Industry.

Weakness

1. The scale of business is quite large, so there are risks of liability, volatility, and risk of being defaulter if payments are not done properly.

2. The company is bound by heavy regulations which have to be complied by the landlords. The governing sector imposes a wide range of rules that sometimes make processes complex to handle.

3. The Banking group of Paragon is growing faster in comparison to its mortgage business; hence it is necessary to analyze the market trends and then formulate a strategy for driving future growth.

Opportunities

1. The acquisition of Britannic money allows the company to deal in Buy to let finance that played an important role in the revitalization of PRS (Private Rented Sector)

2. The private rented Sector is the only housing tenure that is predicted to overcome the social housing industry in the future, so this is a positive sign for the company to grow (owler, 2018).

3. Private renting is now the preferred choice of the majority of the people, so this gives a chance for business growth in future.

4. The company has recently acquired “The 5 Arrows Leading Group” which is a specialist lender in the asset finance market; hence the company will be able to explore more dimensions and make its place in the market.

Threats

1. The possible financial crisis can impact the availability of finances for company operations.

2. The imposition of further rules and regulations can negatively affect the supply of rented sector where there is a need for more investment.

3. As the company is operating in various countries hence the rising rates of raw materials and an increase in pay scale can pose a threat to profitability.

4. There are chances that some low-quality schemes are introduced by competitors which can become a threat for Paragon in emerging markets.

External Environment Analysis

PESTLE Analysis

PESTLE analysis is carried out by business organizations to determine the factors which have a direct impact on business operations. By doing this, the ultimate responsibility on the part of the companies’ top management is to devise a business plan and strategy which proves to be instrumental in handling such factors whether they be political, economic, social, technological, legal or environmental.

Political Factors

The policies designed by the government play a significant role in attaining business objectives of an organization. Paragon Group is operating in a dynamic environment which is mostly influenced by policies of the country or state in which they are operating. Thus the company has exposure to multiple political systems and has opened itself to various kinds of political conditions and framework. For its business dealings to be successful in a dynamic financial services industry spread over multifaceted nations, it is imperative that the Paragon Group of companies enhances its methodology of handling dangers of political conditions (Paragon, 2017). Before investing in a market, the factors considered by Paragon Group of Companies are political strength, the danger of military intrusion, legitimate structure for contact authorization, corruption, and unnecessary delays to bureaucracy and interference of government in the financial services sector, tax rates and incentives, regulations of prices, etc.

Economic Factors

The Macro condition factors, for example, the rate of inflation, savings, interest, and foreign exchange and financial cycle decide the sum of demand and investment in an economy. When the government introduces policies which are in favor of the Consumer Financial Services industry, then it will also impact positively to the Paragon Group. Further, the volatile exchange rate of UK has also proved to be beneficial for the company both from short and long term aspects. The availability of skilled level workforce related to the financial market is moderate to high thus Paragon can utilize skilled employees for exploiting further opportunities (Paragon, 2016). The economic factor in which Paragon is operating should evaluate the pressure of consumer spending which is evident from the stability of the disposable income for a consumer. If there is no increase in income, then it is probable that social inequality will rise which will leave its impact on the selling and buying patterns of the consumer.

Social Factors

Every society has its own culture which determines the flow of business. These social factors further assist the companies in understanding the way of doing business and in comprehending customer preferences. Social factors which must be taken into account by the leaders of Paragon Group of Companies are class structure, attitudes, culture, demographics, level of education, hierarchy, and structure of power, etc. As the gender roles in the UK are evolving; hence, Paragon Group should work on exploiting gender roles for their benefits. Additionally as the education level of UK is high; hence Paragon Group can work on the expansion of their services through the skilled and professional workforce. Media holds a strong presence in UK, and it plays a critical role in formulating public opinions; hence the company should work on marketing campaigns for better positioning of their products in the market.

Technological Factors

Technology holds power to disturb a continuous pattern of growth for a business belonging to any sector. Paragon Group of Companies should work on defining intellectual property rights and patent protection because this will provide the company to attract investors to participate in research and development. Further, the company should understand that technology has shortened the lifecycle of products; hence suppliers are required to continuously work on introducing new products or schemes in the market. The rise of new technologies have put pressure on Paragon Group; hence they force their suppliers to introduce a diverse range of products by keeping a balance of the company’s operational cost (Grasby & Tattersall, 2018). Moreover, the technology in Consumer Financial sector has not reached maturity, and every other financial company is investing substantially on research and development. Hence Paragon Group also need to capitalize in introducing innovations which will grab a high market share for the company.

Legal Factors

Many countries have a poor legal framework; thus, they are incapable of protecting the business ideas of an organization. Before entering such markets, a firm should critically ascertain that there exist chances of theft of business ideas and intellectual property of an organization which might give it an edge over its rivals. When entering a new market, the factors that Paragon Group of Companies should assess are laws governing copyright, patents, discrimination policies, and protection of consumers, the law concerning employment, health, and safety of labor and workers and protection of data (Group, 2018). It is also necessary for a company to find out the time which is taken for business cases in court because at times average time for resolution of cases take years

Environmental Factors

Before entering new markets or beginning another business, the firm ought to assess the ecological measures that are necessary for working in those business sectors. A portion of the ecological components that a firm ought to consider are climate, weather, anti-pollution laws, recycling, management of waste in the financial sector, use of ecological products, support towards renewable energy, etc.

2. Analysis of the Company’s Strategic Position

a. Leadership and Communication

According to Anne Marie, who is the head of learning and developing a team of HR Paragon Group, asserts that they are lucky to have stable leadership. The team in the panel of Paragon Group of Companies plc is very professional and competent, which is a necessity for a business to grow. The CEO Nigel Torrington, has experience of more than 30 years of business, out of which he has performed his duties as a CEO for 20 years. Therefore, he has seen the market and business growth. When it comes to leading a group of people, it’s a strength of Paragon as it carries clear objectives. The company is operating more on the lines of transformational leadership because quick decision making is done where each person takes accountability of the role assigned. If the management feels that middle management is not able to manage certain decisions, then the transactional role of leadership is followed. The company expects every manager to be a leader and transform the company’s objectives into meaningful results by providing clear direction and coaching. Paragon offers good remunerations packages that also helps in strengthening teams.

The company makes use of an internal hub of communication where they post notices where it should be visible to everyone within the organization. This area is dedicated to post results or interim results. Videos of CEO giving guidelines are also broadcasted to the employees along with a group discussion which also takes place where the CEO and director of finance inform the employees about the success of the Paragon group with future challenges ahead.

b. Company’s culture, ethical and value base

The culture of the company is to adapt which changing conditions, where individuals are required to adjust and change as per expectations of the company’s management. Gone are those times when there used to be little or no adaptations in the work of employees. Nowadays, there has to be flexibility in the working operations of the employees. There are various ways an employee can work for the Paragon Group of Companies, each having their distinct job roles. The company follows a strong ethical approach where it is assured that employees are provided with acceptable working conditions, and they are respected for their work (Sims, 2000). Such ethical values contribute a lot in the day to day operations of the businesses of the Paragon Group of companies. Moreover, the underlying values of the company are focused on providing good quality products while working endlessly on innovation. All this will help the company in attaining customers trust and commitment.

c. Company’s position in sector

The current situation or value of the Paragon Group of Companies is the first and foremost fact that it is listed on the FTSE 250 which contains companies ranked from top 101 to 350 on the London Stock Exchange (LSE). The Group has completed six years of its operations employing 1300 people. The whole financial market has been subject to change over the past few years and the Brexit is making it much more sensitive and volatile (Group, 2018). Currently, the Group has got a very strong foundation of its clients, their staff is professional, and the bank is happy with their overall performance as the Paragon Group of Companies have broken-even not only that the Group expects to produce newer products and services launched under bank name.

d. Critical Evaluation of the strengths and limitations of the tools used

SWOT Analysis

This is one of the most widely used strategic planning tool by every organization but it holds some limitations. It is evident from the discussion that at times both strength and weakness are factors which can affect organization as a whole. But at times there are some weaknesses identified which if perceived from another angle can be transformed into an opportunity. If this weakness is turned into an opportunity then then company will automatically take one step ahead from its competitors. Another limitation which is identified in SWOT analysis is that it only provides an evaluation window and does not provide complete implementation plan of identified strategies. On the other hand the strength of this tool is that it provides complete analysis of the internal environment of the company hence the information generated during this process will help the management in formulating their future strategies and aligning them with company’s objectives.

PESTEL Analysis

The strength of PESTEL lies in the fact that it is simple and easy to implement and is based on cross functional expertise and skills. On the other hand the obvious limitation of PESTEL is that it is the form of strategic analysis tool which is used for investigating the external factors only. Hence it is required to use some other framework in combination with this tool for doing internal analysis. Another limitation which this framework impose include all those factors which can change quickly.

e. Client Needs

The Paragon Group of Companies have decided to work on their five year plan which must be detailed and communicated to all their main stakeholders. Moreover the company has observed volatility in UK market especially after Trump elections and Brexit scenario. Further the company has decided to train and coach their managers about working together in teams and how to attain meaningful objectives for their team.

Identified Main Issues in Paragon Group

  • The company has recently acquired “The 5 Arrows Leading Group” which is primarily a lending business associated with finance market. The challenge which the company is facing currently is to manage the resources associated with this group because Paragon is relatively new to asset finance business.
  • Another aspect on which the company needs to research more are the areas from where funding can be generated. Pooling of assets such as mortgage into a lending form of security has directed attention of various investors. But the company should make sure that all associated documents and mortgage is real and genuine.

Section 2: Recommendations to the organization

Internal

The company has grown larger over time, in terms of employees it has gone from being 500 workers going six years back to 1300 workers up until now (Paragon, 2019). The organization should have a keen interest in safeguarding the rights of shareholders and making them participate more and more in organizations day to day practices. Happy shareholders are one of the key aspects of an organization’s success strategically.

External

The Paragon Group Of Companies should consider the emerging markets amidst the government's free trade agreement and adapt itself with new technologies. Adapting to the new technologies will help the Paragon group of companies to retain their customers and appeal to new customers with alternative pricing strategies. The need to adopt newer technology is also necessary because of its rapidly growing business. The advertisement of the services by the company is not detailed even though their products are selling good in the market. Hence the competitors of the company can utilize this as an opportunity to market their products efficiently.

Client question

"How can organization keeps the employees motivated throughout the year, for them to work at maximum potential?"

The answer to this would be the encouragement and acknowledgment of employees work. With maximum communication and making them feel involved, and by rewarding their work by assigning performance-based incentives and bonuses.

Humans, innately when working in groups, tend to perform better and effective, and by encouraging teamwork, employees could remain very motivated.

Section 3: Implementation and Recommendations

The change is inevitable; it will happen whether we want it or not, the above mention recommendations could be implemented by analyzing the market and communicating with the staff to make sure they are ready to embrace the rapidly changing environment. Healthy communication is required; this is essential for numerous reasons as it prevents misunderstandings and conflicts between the workers. It promotes healthy work ethics and also helps the organization to grow as a whole; it boosts the creative and innovational ideas to float between the employees.

Leadership Styles

The most common leadership styles are as follows (Iqbal, 2011):

  • Transformational Leadership: They are one who holds the ability to inspire staff by creating an intellectually stimulating environment.
  • Transactional Leadership: In this form of leadership, a clear chain of command must be utilized in which strict management approach is taken.
  • Autocratic Leadership: The owner holds complete power and does not share decision taking with workers (Exantus, 2012).
  • Servant Leadership: This is the form of leadership in which collective decision making is encouraged.

The Paragon group of companies must maintain a leadership that has a keen understanding of the necessities of the organization. The leadership must ensure the participation from the operational level, and tactical level workers are all aligned, this promotes a healthy environment and boosts the morale of employees. The reason for the success of good leadership is an exchange of ideology between the managers and workers; this promotes a healthy working environment and helps everyone work efficiently.

Communication of Vision

For Paragon group of companies to be successful, several staff meetings would help create a good work environment, the company could set up a portal to help employees share their ideas and innovations. At the end of each year, an annual evaluation seminar would help the company grow effectively.

Adapting to change

The easiest way to cope with change would be to maintain a very positive attitude; we must accept the fact that change is inevitable and we must reflect ourselves of what inner changes we must bring, what new attitude we should adopt to cope with the ever-changing environment.

Section 4: Critical Reflection

Overall this module has helped me in attaining significant information regarding strategic management, leadership and communication. All these elements are significant for a consultant and this module has taught various lessons about the consultancy. This process was very motivating and helped me in socializing and brainstorming new ideas. The activities provided us a chance to understand different styles of leadership which eventually compelled us to make improvement in ourselves.

Apart from this I have understood the pattern of identifying client requirements and how to apply strategic analysis using SWOT or PESTLE analysis. From these basic models I came to know that life is unpredictable and we should list down all possible solutions for the problem. Further I came to know that every business whether it is product or service based is dependent on good leadership style and management strategies. Overall this process was thought provoking which made me understand consultancy. The knowledge gained during this course will also assist me in future for taking right decision about course selection or even setting up my own business. I would also like to take this opportunity to thank my instructor and supervisors who made this module interesting and assisted me in completing this project successfully.

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