On December 04, 2008, Capital One acquired a well known bank called Chevy Chase Bank. As per the deal, Capital One purchased the bank by paying $445 million in cash and 2.56 million shares of Capital One worth $75 million (Gaithersburg Local, 2008).
Companies are directly affected by the external environmental forces that consist of political, economic, legal, social and technological elements. Changes in these external forces directly affect the company which necessitates it to modify the corporate strategies accordingly.
In 2008-09, the world economy was shaken by a recessionary turmoil and the financial sector was the worst hit. Functioning exclusively in the banking business, the company is at a high leveraged state. When market conditions are favorable, their revenue as well as profitability increases quite rapidly but when the market conditions are hostile, the company faces a sharp fall in business. The economic condition has revived in the developing countries but the developed countries like UK and US will take more time to come out of this economic shock. Therefore economic condition is one of the vital forces that Capital One needs to consider. In terms of technology, Capital One enjoys a sound position. The political condition is quite stable in US hence this will not be a major concern. After the economic recession in US, the government is in the process of introducing certain changes in its legal framework to exercise a better control on the financial market. Hence, Capital One will need to understand the changes in the legal policies and should make the desired modification. Apart from the above mentioned forces the competitive force prevailing in the US market needs to be taken into consideration by Capital One. The retail banking industry is highly attractive which lures new entrants into this industry. The lenient strategy maintained by the government of US is an added advantage for the new entrants. The new entrants have not only