Cash Connection Case Analysis Essay Example

beneficial qualities for customers. Although Cash Connection asserts that it has a customer-friendly business model centered around helpful staff, the overall business model contradicts this assertion. Cash Connection specifically targets financially disadvantaged individuals by providing loans with excessively high interest rates to those who cannot afford them. This practice is deemed unacceptable as it perpetuates a cycle of continuously mounting debt, ultimately resulting in bankruptcy.

The struggling U.S. economy has had a significant impact on the payday lending industry. The prolonged recession has caused high unemployment and underemployment, forcing people to deplete their savings and turn to payday loans. Furthermore, the instability in the banking and housing sectors has caused many individuals to experience credit loss, leading them to seek alternative financial solutions. Therefore, it is crucial to assess the strength ratings of each force in Porter's Five Forces Model.

Cash Connection demonstrates strengths and weaknesses on Porter's Five Forces Model. Despite being in a competitive industry, the company faces minimal risk of new market entrants due to its customers being stuck in a debt cycle with limited alternatives. Additionally, the threat of substitute products is low as Cash Connection targets individuals who have no other options and are in urgent need of money. Moreover, customers have little bargaining power, as Cash Connection maintains complete control over lending decisions.

The payday lending industry has the freedom to choose any contract they want, but their suppliers also have significant influence for the same reasons. Moreover, there is intense competition in the industry with more than 23,000 payday loan stores in the U.S. These strength ratings suggest that initially, the payday lending industry appears

very attractive. It provides a convenient and fast way to get cash, especially for those with limited options. However, upon closer examination, it becomes evident that this industry is both risky and unethical.

The act of trapping individuals in debt through high interest rates is deemed morally unacceptable. The payday lending industry is currently influenced by various factors, with the poor state of the economy being a significant driving force. The occurrence of a large number of Americans facing foreclosure and bankruptcy has never been witnessed before. Additionally, there has never been such a strong demand for quick cash, regardless of its cost. Consequently, a new flourishing industry has emerged, prompting the question: what are its consequences? Unless people become better informed or there is governmental intervention, the payday industry will continue to exploit those who rely on their paycheck for survival.