1-Evaluate Vanguard’s characteristics as an organization? What are its strengths and vulnerabilities?
Evaluate Vanguard’s characteristics as organizations are visible in the competitive mutual fund market. First a, in the mutual fund market, the company has a good value of its assets, which helps to increase and sustain the market share. Remarkably, the value of assets has been increasing for many years, and it has emerged as a top strength of the company. In addition, the financial capital of the company makes it quite capable of expanding the business along with different segments. The pension is a prominent segment, which has been enhanced by the management of the company through a strong financial positional. The strong financial position is triggered by the expansion a process of the company, and it seems a unique characteristic. Vanguard Group is demonstrating different initiatives to face interventions of different competitors. Interestingly, the internal money management group is quite visible in the company, which keep the company in the loop and suitable despite having these interventions in the competitive market. The mutual fund market seems dynamic, and these are dynamic characteristic of the company.
Now, relative to the strengths and vulnerabilities of the Vanguard Group, the company seems on top when it comes to the mutual fund industry. According to different financial and customer service reports, the company is on top in terms of market share and asset values for many years. It has sustained the band image of the company, which looks a big strength. Another prominent strength of the company is the business expansion, as it is dealing with five different domestic index funds. The combination of local and international index funds is the growth and expansion, which makes the company sustainable in the mutual fund market. The culture of the company is unique as compared to other companies in the market. The company strengthens employees through incentives, motivation, and training. The human capital is experienced, skillful and assertive in contributing to the success of the company. Of course, in this unique culture, the effective and lucrative workforce is a big strength.
The company business is vulnerable due to the line of “Spartan Funds. From 1990 to 1992, different competitors came up with different funding service. These differentiated services made the company vulnerable. Both, local and international clients may have different choices or preferences due to the availability of these services. There is a perception that the company is depicting the high-cost portfolios. Lacking the low-cost portfolio to enhance the visibility of market return along with some predictability makes the business of Vanguard Group venerable, as far as the competitor’s actions are concerned.
2-How is Vanguard like Wal-Mart or Home Depot? How is it different? Do you think its market share will continue to grow? Or not?
Vanguard is like Wal-Mart or Home Depot in term of mutual fund strategy. In the competitive retail market, the Wal-Mart management has emphasized on the brand name products and services for customers. Interestingly, Vanguard Group has initiated the structurally lower expense base like these companies in the retail industry. Obviously, to grab the immense range of the customer, the company is looking to attract and retain customers through low price considerations. These companies intend to gain the cost advantages in the competitive and contemporary business environment. Vanguard Company is like Wal-Mart or Home Depot because it also exploits the low-cost services along with the sustained quality. Also, regarding cost saving and measure of results, the methods resemble. Thus, it seems the resemblances in the strategic approach of the company to be lucrative and sustain in the competitive market. Obviously, in the mutual fund market, these strategies have helped the management to ensure the sustainability and competitive advantage, which enables the growth and profitability.
The company is different from these retailers regarding products, business, and market. Wal-Mart or Home Depot exists in the retail market, and Vanguard exists in the mutual fund market. Also, it has been observed that the mutual fund market is containing less competition and as compared to the retail market. Vanguard has competitors, but the intensity is lower than Wal-Mart and Home Depot. Another difference between these firms is the usability or utilization of products or services. Wal-Mart and Home Depot are depicting intangible products, and on the other hand, Vanguard is expressing intangible services.
Relative to the market share, the Vanguard group has been showing its market growth since 1990. Still, it is increasing in the modern business era due to the competitive strategies and some other strategic considerations. Interestingly, Wal-Mart, Home Depot, and Vanguard will contain the market growth due to the business expansion, comprehensive product and service portfolio, and large customer base.
3-How should Fidelity, Dreyfus, T. Rowe Price and others compete with Vanguard? Please answer the question first, and there is also a framework you need to do.
Fidelity competes with the “Spartan Funds and Non-Spartan Funds”. In the money market and fixed income areas, Fidelity comes up with some differentiation. Instead of just focusing on the quality, this company is intending to make some differences to derive different preferences. The cost leadership strategy of these competitors is also visible. This company does not charge the annual management fee for clients, which is a good approach to attract customers. On the other hand, the Dreyfus, a prominent competitor, is also in the limelight due to its low-cost structure. Fascinatingly, this company is competing through coming up with the low-cost alternatives in the mutual fund markets. In money market wars, the company has exploited the opportunity and gain the advantage over Vanguard. Despite containing the market share, this company has listed its profitability, which makes the rivalry quite low.
Porter five forces seem pertinent to derive some competitive insights. It also seems a good framework for the Vanguard.
Porter Five Forces Framework for The Vanguard Group, Inc
Bargaining Power of Buyers for The Vanguard Group, Inc
The braining power of buyer is high in this industry due to the availability of fund substitutes by the competitors. Customers navigate prices and quality of mutual funds in the competitive market and make their preferences. Therefore, the main intention of all competitors is to keep the prices low.
Bargaining Power of Suppliers for The Vanguard Group, Inc
The bargaining power of suppliers is moderate, and it is based on the supplier relations. As far as the flow of mutual funds in the industries concerned, companies are considering the concentrated suppliers to retain the quality and enable easier access to clients.
Threats of Substitutes for The Vanguard Group, Inc
Threats of substitutes in the mutual fund market are high, as there are some top competitors such as Fidelity and Dreyfus, which are presenting several substitutes at low prices. The examples of these substitutes are Spartan Funds and Non-Spartan Funds. The company has to focus on the portfolio development process to eliminate the threat of substitutes.
Threats of New Entrants for The Vanguard Group, Inc
The threat of new entrants in the industry is low, as there is a need of high financial capital and a prominent brand image to exist in the market, the new company may take much time to create the brand image. Customers seem loyal to different existing brands, and they do not want to take financial risks.
Competitive Rivalry for The Vanguard Group, Inc
Top competitors such as Fidelity and Dreyfus and many other make the intense competitive rivalry. The companies are depicting the market share growth and mutual fund portfolio development, which makes the competitive rivalry quite high. With the passage of the time, the most important thing for Vanguard is to keep its low-cost structure in this intense competitive rivalry.
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