Sustainable Market Fundamentals - Essay Example

Sustainable Market Fundamentals Table of Content 0 Introduction……………………………………………………………….. 3 2.0 Triple Bottom Line Analysis……………………………………………… 32.1 Profit………………………………………………………………... 3 2.2 Planet……………………………………………………………….. 5 2.3 People……………………………………………………………….. 6 3.0 Stakeholder’s Analysis……………………………………………………... 6 3.1 Company……………………………………………………………. 6 3.2 Community…………………………………………………………. 7 3.3 Customer…………………………………………………………… 9 3.4 Competitors………………………………………………………… 9 4.0 Conclusion………………………………………………………………….. 10 5.0 References………………………………………………………………….. 11 Virginia Community Capital Inc. is seen among the top non-profit motivated banking entities and also community financial enterprises. It creates innovative investments mitigation measures and provides loans that are affordable for economic empowerment and development in Virginia. This study thus seeks to carry out a triple bottom line analysis and stakeholder’s analysis of this entity. Triple Bottom Line Analysis Triple bottom analysis encompasses three basic pillars of the company that have got a direct impact on its success or failure. This will help us asses the profitability of such organization. Virginia Community Capital Inc. is however unique because it is a non-profit motivated bank. The bank target mostly low income and middle income earning individuals to empower them. While at this, the bank often earn considerable amount of profit that is majorly given back to the community with regard to communal services (Savitz, 2013 p.12). Profit This is the first pillar of the Triple Bottom Line analysis that is to be employed to analyze the overall performance of Virgin Community Capital Inc. (VCC). The bank’s greatest source is the interests it earns from the loans it advances to the community for various activities they take. VCC is approximated to have issued out loans worth a total of $419 million. Below is analysis of the financial statement that reveals the ideal position of the organization (Chhabra, D., 2010 p.13). Key Ratios for the Bank 2012 2011 2010 Earnings Ratio (Interest Expense/ Interest Earned) 0.668938 0.353802 0.320881 Profit Ratios(Net Interest Income/ Total Deposit) 0.072464 0.056585 0.043983 Loan to Deposit Ratio 2.087702 1.963373 1.799559 Loan Loss Provision rate 0.018242 0.096902 0.144198 Rate of Assets Turnover 0.013022 0.012219 0.017995 The bank is believed to have reported an earnings ratio of about 66% in the year 2012. This is higher than the 35% registered in 2011. This implies that the expense of interest increased more than the increase of the interest earned by the bank. Deposition amount obviously was higher than the amount of loans in the year before. This depicts that at that particular juncture; the bank was working towards a negative ground and was registering a loss (Savitz, 2013 p.13). This is also portrayed by a trend analysis whereby the income interest increased as from the year before, 2011, 50%, compared to a lesser value in 2012, 17%. However, the interest from expense rose from 65% to 121% by 2012. It is prudent to note that the profit ratio is seen to have increased from 0.056 to 0.072 and is an indicator that bank is self sustainable due to the earned profit. The provision rate of loans in VCC is seen to have gone down. This depict that solvency of the bank in situations of default would be prudent since the bank is at less riskier loans in the current year. This is clear when you look at the decreasing loan loss provision ratio (Rothaermel, 2013 p.22). A high loan to deposition ratio implies that in a case of liquid funds, the bank may undergo crisis. It is evident that the bank has gone through a loan deposition ratio increase as from 1.79 in 2010 to 2.08 in 2012. Liquidity condition of the bank has therefore become weaker with increasing time (Chouinard, 2006 p.30). The bank has also gone through adverse situation in the year before. The net assets of the bank underwent decline and this shows that advances amount have gone down within that one year time lapse. In the current years, the net non-interest has gone through a loss and the total depositions have decreased. With regards to profit analysis, the bank is not earning much as it is expected to be. The above data reveals so. In a situation of crisis, the bank would be at a crisis (Gimenez, Sierra and Rodon, 2012 p.33). In spite of it sustaining itself, it faces impending danger. Other competitors like Farmers Bank are not heavily affected as in the case of VCC. VCC is thus underperforming and must find mitigation measures to redress the issues at hand, Planet Virginia Community Capital Inc works towards a better environment so that the community may thrive in a better place. The bank has embarked on environmental conservation awareness all over Virginia to make the people conscious of the environment. This has proved a success to some parts of Virginia. Aside from this, most of the times, the bank and its workers have organized charitable works that gear towards a healthy and clean environment such as town cleaning. The bank has also ensured that each year it carries’s tree planting activity to conserve Virginia’s soil and water catchment areas. This has boosted its relationship with the community (Rothaermel, 2013 p.24). VCC has also partnered with Virginia’s wild life to enhance its conservation. The bank invests a lot of money to ensure that the area’s precious wildlife is conserved. The bank has been seen at the fore front in condemning environmental pollution and the suspects. They have advocated for a green Virginia and can be viewed to be net positive (Gimenez, Sierra and Rodon, 2012 p.35). This is evident on its numerous attempts to conserve the environment and initiatives that make the environment safe for the community (Chouinard, 2006 p.45). People Virgin Community Capital Inc has this conviction that their employees are the most vital assets that they have in the organization. Due to this, they offer competitive salaries to their employees. Aside from this, other benefits that come to the employees of VCC are health, vision and dental care programs. These services are paid full time. They also offer a retirement plan of 401k to their workers. The workers also benefit from life insurance and short and long time disabilities. They provide ten paid holidays in every year to their workers. There exist a healthy relationship of the bank and the workers (Gimenez, Sierra and Rodon, 2012 p.36). VCC do not discriminate in the recruitment of its staff on the grounds of race, religion, sex or color. Besides, the bank has established a healthy relationship with its partners for better cooperation. The bank organizes exchange programs with some of their partners in form of workshops and seminars in promoting a healthy relationship. The bank, with regards to above facts can be seen to working on a net positive as it has managed to fulfill over 50% of the above obligations (Savitz, 2013 p.14). Stakeholder’s Analysis This section of the paper will carry out a broad stakeholder analysis of Virginia Community Capital Inc. in the following areas; company analysis, community analysis, customer analysis and competitor analysis. Company This part of the paper encompasses the strengths and the weaknesses of Virginia Community Capital Inc and a critical analysis of how of how one of the aspects affects the application of the 3BL of the company. Strengths The organization provides flexible plus innovative financial products and service which are created to aid the community and house development ventures. Besides, the organization manages to create employment (Savitz 2013, p32). It thus creates sustainability in the community. The company boasts of well trained workers. The workers are equipped with computer skills that are highly sort for in the organization. The workers are vast with both inter-personal and intra-personal skill and are therefore able to interact among themselves and the customers very well (Berger and Lewis, 2011 pg 34). Apart from this, the management is composed of prominent individuals who have connections with the government and other companies. Some of them have served in government parastatals bringing skills and connections. A good example is the composition of their board of directors, example is Kenneth N. Daniels, Professor of Finance, and Virginia Commonwealth University School of Business Primary investors like Bank of America and Cardinal Bank are so vibrant in the organization towards its growth by their thorough investment (Berger and Lewis, 2011 pg 34). These entire factors help maximize the profit of the organization. This makes the company be seen to performing well. Weakness Major weakness of the organization is anchored on the limited number of employees available. The organization being meticulous on its recruitment so as to provide the best services, it goes for highly trained professionals who are not readily available. This therefore renders the company to lack of adequate labor force. Complaints of improper remuneration of workers have also been raised and this is a challenge hampering the progress of the organization. With regards these two issues, the organization is under performing (Berger and Lewis, 2011 pg 36). Community Virginia Community Capital Inc does not sail alone in the world of business. It is surrounded by a large community that affects its operation in many spheres (Chouinard, 2006 p.21). The community of the organization includes the media or press, unions, government policies, business partners and small investors. Unser this, we shall review how each of these influence the organization’s 3BL policy application (Berger and Lewis, 2011 pg 30). The press shapes the public opinion. There are so many media companies in Virginia: CNN, West Virginia Media Holdings and Virginia Newspaper are the most dominant one. Besides, social media is also another prominent one (Aaltonen, 2011 p.44) and (Chouinard, 2006 p.21). These media are always at the centre of talking about the good and bad things that emanates from the organization. For instance, when workers loge complains, the press is fast to publicize the issue. Consequently the public develop a bad mentality towards VCC from the information released in the press. The opposite is true when positive information travels in the media (Berger and Lewis, 2011 pg 36). Partners like Bank of America are positively influencing the organization by investing their surplus profits to the organization. This has helped VCC increase its labor force and provide better service thus attaining much revenue. Human rights unions like America Civil Liberties Union are at the front to streamline the work of VCC so that it ensures that the workers’ are not infringed. VCC thus has the obligation to work towards the demands of search unions (Savitz, 2013 p.12). A thorough analysis of the company and the influence of the community reveal that there is a direct impact of the community to VCC and aside from these factors; the company is rated to be performing. Customer Being centralized in Virginia, the organization enjoys a large customer base from Virginia. Aside from this, Virginia Community Capital Inc. also has a great number of customers in other states (Chhabra, D., 2010 p.90). The banking entity also targets customers of all ages; from young adults of eighteen years to any other age above. The company intends to promote equitable growth among all adults in America thus it offers no restriction of age, provided the adulthood age is attained, in its provision of services (Aaltonen, 2011 p.41). VCC also targets customers of both sexes. Male and females are served equally. Apart from this, women are the most targeted since VCC aims at empowering women. Customers of varying income level are also encouraged to access the numerous services offered by the entity. From, low income, average income to high income earners, all trade with VCC (Aaltonen, 2011 p.43). Competitors Located in a business thriving centre, Virginia Community Capital Inc faces competition from predominantly from other similar enterprises. They include; City National Bank, Farmers Bank, Franklin Federal Savings Bank and Capital One. Besides, the numerous SACCOS also pose competition to VCC. Capital One for instance is one of the strongest competitors around. Capital One boasts of well trained workers with great expertise from the senior most level junior most stratification. The bank has also numerous branches in other states with more workers (Chhabra, D., 2010 p.90). The bank also has massive investors and portrays a good relation with the community. There strongest part is their financial power and thus is loved by many customers. Most part of marketing is done by promotions and advertisements (Berger and Lewis, 2011 pg 45). Capital One, however, is deemed weak compared to Virgin Community Capital Inc. in terms of remuneration of the workers. Workers here are not well paid and have often faced labor crisis. Another short coming of capital one is their engrossment in promotions and advertising as marketing methods and omitting some others (Chhabra, D., 2010 p.95). Virginia Community Capital Inc is a vibrant company. Through the 3BL analysis done, profit, planet and people, it registers a fair rating. This means it can sustain itself well for some time. The stakeholder’s analysis reveals a more vibrant company that can sore even higher. This entirely means that when both quantitative and qualitative data retrieved from this analysis are taken carefully, and the weak points of the organization are rectified, the bank can be more prosperous (Chhabra, D., 2010 p.96). References Aaltonen, K., 2011. Project stakeholder analysis as an environmental interpretation process. International journal of project management, 29(2), 165-183. Berger, H., & Lewis, C., 2011. Stakeholder analysis is key to client–supplier relationships of global outsourcing project success. International Journal of Information Management, 31(5), 480-485. Chhabra, D., 2010. Sustainable Marketing. London: Routledge Chouinard, Y. (2006). Let my people go surfing: the education of a reluctant businessman. Penguin Gimenez, C., Sierra, V., & Rodon, J., 2012. Sustainable operations: Their impact on the triple bottom line. International Journal of Production Economics, 140(1), 149-159. Martin, D., and Schouten, J., 2011. Sustainable Marketing. New Jersey: Pearson Porter, M. E., 2011. Competitive advantage of nations: creating and sustaining superior performance. Simon and Schuster. Rothaermel, F. T., 2013. Strategic Management: Concepts. McGraw-Hill Irwin. Savitz, A., 2013. The triple bottom line: how todays best-run companies are achieving economic, social and environmental success-and how you can too. John Wiley & Sons. Read More