ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Business Strategy Analysis: Anti-Gun Statement by GE Capital?

Updated on April 26, 2013

Today, April 26, 2013, GE Capital announced that it would no longer finance gun sales through stores that exclusively sell firearms. This article examines the strategy conclusions that can be made regarding this strategic decision. Arguing for or against gun control is not the object of this article. At the bottom of this article are links to news services regarding this story.

The Initial Story

In 2008 GE Capital (GEC) made a decision to stop financing firearms through gun dealers. This decision did not affect stores that sold other products in addition to guns such as Wal-Mart. Since that time, GEC has been phasing out the financing and had less than 75 guns stores that still were clients.

The financing by GEC is not for the stores themselves, but for the customers of the store who needed financing in order to purchase a firearm. A customer would came into a gun store, find a firearm to purchase, and then go through a credit check to determine eligibility for credit. If approved, GEC would pay the gun store and the customer would make payments to GEC.

In its announcement the spokesperson for GEC did not state why the policy was enacted. As a result, rumors have begun to float about this being a anti-gun political statement. Since this customer segment was insignificant to GEC's operations, speculation exists that GEC could afford to make a very visible statement for gun control while not affecting its bottom line.

Strategy Lessons

There are several strategy lessons that can be learned from this decision. This list is not exhaustive and, if the reader wishes to add to the list, then commenting on this article is certainly an option. The four conclusions that can be reached are as follows:

  1. Gun shops are not a major customer in the industry. While the news accounts below state this, it was not necessary for them to do so. One of Michael Porter's five competitive forces is buyer power. This force exists when buyers exert such considerable influence over a market that firms in the market increase rivalry to accommodate these buyers. GEC is not just ignoring the gun shops as a customer but GEC is eliminating them as a customer. Thus, gun shops do not have significant influence in the capital market.
  2. The competitive intensity of the capital market is not extreme. If the capital industry were extremely competitive, firms in the industry would be fighting over every customer, no matter how small of a segment. GEC obviously is not concerned about how losing the gun shops will affect its bottom line; it does not need to fight for this customer.
  3. There is now an opportunity for another firm to fill the gap. A previous article discusses the SWOT analysis and the need to identify opportunities in the market. Another capital firm might look at this as an opportunity to gain the gun shops as customers. An early mover to court the gun segment might reap other profound benefits explained in point number four.
  4. GEC may have taken a gamble that either it does not know it is taking or does not think is relevant. As discussed before, there does not seem to be much competition in the capital markets because customers are fragmented and do not come together in an organized block. But by making what seems to be a political statement about guns, GEC runs the risk of offending two groups of its remaining customers. The first group is customers that feel business is business and politics should stay out. The second group is customers that are pro-gun and disagree with GEC's decision. If these two groups become unified into a single voice that shows anger at GEC, GEC might see a major loss in its customer base. It is at this point GEC might be forced to reconsider its position and allow the gun shops to stay as customers. It is also at this point that the opportunistic capital firm could siphon away a significant number of customers from GEC.

Summary

GE Capital has certainly demonstrated it freedom to make a strategic decision. There are several things that can be learned about the capital market from this decision. However, GE Capital may also be risking part of its customer base by seemingly making a political statement against guns. This industry might be interesting to watch in the next few months.

Comments

    0 of 8192 characters used
    Post Comment

    No comments yet.

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://hubpages.com/privacy-policy#gdpr

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)