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Paragon Group: Company Analysis | Get Homework Help

Introduction

Paragon Group is an FTSE 250 company listed on the London Stock Exchange (Martin, and Hadley, 2008). Paragon Group offers mortgages to large landlords who have accumulated huge financial assets and rent out spaces to students. The executive board consists of members who are situated in the same building. The positioning of the board members in one building entails that there is quick and fast communication on matters concerning decisions to be made. The members are readily available for any consultations and discussions concerning issues in the company.

Internal and External Environment

SWOT

According to the SWOT analysis, Paragon has strengths through its strategic position in the economy through diversification. The company actively offers various types of services in two different markets. The markets include real estate where the company offers mortgages to landlords and the financial industry through its banking services. Paragon operates in a specialist field where the company offers lending to customers for them to develop properties (Stephens, and Quilgars, 2008). Most of the company’s clients engage in the buy-to-let lend sector. The company deals in a specific field which is very effective in tailoring its services towards the real estate sector. The company generates high income because it has a specific target market (Cravens, and Piercy, 2006). For its mortgages, Paragon offers lending services to landlords who develop properties to rent to students. Student form a large population which leads to an increase in house demand. The demand entails that the Paragon group offers services to a ready market hence continuous profit. There is a lot of potential in lending to the real estate and the company has since registered high growth and development rates.

Another strength is that Paragon utilizes strategies such as securitization which ensures that the company is funded when interest rates are low in the financial industry (Acharya, Schnabl, and Suarez, 2013). The organization offers tradable securities which include bonds that are supported by income made through loans, assets, public work projects together with other income sources. Also, the company pools assets like mortgages into securities that are divided and sold to various categories of investors. The securitization has proven to be effective as the company has funds to lend in scenarios that other financial institutions were not offering lending services. Diversification offers Paragon group a competitive advantage (Graham, 2008) in the industries as it engages in different services and has other sources of lending.

Paragon groups take pride in their quick decision-making process as compared to other companies (Saaty, 2008). The decisions are made by the company’s executive boards through a well-defined process. Also, the communication channels used are direct hence the members get first-hand information. The channels ensure that the information is not distorted and they are able to give real-time feedback on decisions in the company. Paragon Group board members are risk takers as they make decisions on opportunities really fast (Saaty, 2008). The risk-taking aspect of the company ensures that the company utilizes all available opportunities which increase productivity in the company.

Weaknesses

Although Paragon group has been a successful company there are major areas that the company has to develop for it to benefit. The company is facing challenges in effectiveness because it centrally located and does not operate in a wide geographical. The weakness has been brought about by the new acquisition of the asset specialist lender known as the “The Arrows Leading Group”. Paragon does not have extensive knowledge of the assets finance market hence is utilizing resources from “The Arrows Leading Group”. The resources include the company’s workforce, offices, and other equipment. “The Arrows Leading Group” operates all across London which entails that Paragon has to expand its services. Paragon lacks enough workforce to work in the new locations hence is subjected to ineffectiveness (Ha, and Coghill, 2008). Currently, Paragon has an employee base of 1300 people with the many of them based at West-Midlands, Solihull and a population of about 400-500 working across the country.

Opportunity

Paragon group has opportunities because of continuous diversification which already has a strong foundation. The company has a large customer base and has competent employees who are offering the various services provided by the company. The company seeks to develop new modes of specialist lending, new products, and other services under Paragon Bank. The firm also aims at engaging in other acquisitions that will complement the business to promote the future growth of the company (Ha, and Coghill, 2008). Changes in the value of the property have made it hard for people to afford mortgages which offer landlords an opportunity and paragon in the property market. The landlords are looking into buying various properties as investments for lending purposes. This means that the landlords will need to borrow in order to make the investment. Paragon will utilize the opportunity by lending mortgages to the landlords to finance their investment hence making profits.

Threat

The “buy to let’ market has become crowded with new entrants who are engaging in offering mortgages and lending services. Presence of many service providers has increased competition (Stephens, and Quilgars, 2008) in the specialist lending market thus acting as a threat to paragon. The financial market and property markets are surrounded by high volatility as there are varying changes from time to time. The markets are affected by threats such as elections which cause changes in the governance of the country hence affecting the economy as a whole. Other factors affecting Paragon operation are issues like the Brexit which are unpredictable and have negative impacts. The SWOT technique has proven to be useful and effective in analyzing the strategic position of Paragon

 

PEST

According to the PEST analysis, Paragon group operates in very competitive industries. The industries attract active government participation as they form a large part of the country’s economy. The U.K has set various rules and regulation that govern and control both the financial and property industries. There are rules that control the interest rates ensuring that the rates charged are realistic. Also, there are major requirements needed in acquisition engagements as the government has to verify and approve the process. Paragon is affected by government issues such as the Brexit where U.K exited from the European Union (Heisbourg, F., 2016). The exit has brought about uncertainties as there is a decrease in international trade and the value of the euro against the dollar. The financial and property markets form a large part of the economy hence Paragon is affected by different economic factors. Among the major economic factors affecting Paragon is the fluctuation of share prices in the country. The changes in supply and demand of shares affect Paragon securitization which provides the company with funding. Changes in interest rate affect Paragon lending because the low-interest rate decreases the company’s income.

A major social factor that contributes to the Paragon operations is the educational levels in the U.K (Ho, 2014). The presence of a large population of students is significant for Paragon because it entails that landlords are required to build more rentals for the students. The landlords seek finances from Paragon hence more income for the company. The residents in the country have a high lifestyle hence seek to invest in securities to finance their lifestyle, Paragon offers the various securities that the residents can invest in which generates more revenue. Modern technology has positively impacted Paragon operations by increasing efficiency and effectiveness (Gupta, 2013). Technology has promoted communication through social media where discussions are held over the internet with members at different locations. The technology helps in storing information and acts as a reference point. Utilization of the PEST tool is helpful in identifying various factors that affect Paragon strategic position.

Strategic Position

The company engages in servicing loans in place of third parties. Paragon groups act in place of building societies and banks by servicing loan books that the other parties are incapable of. The company is active in the financial sector through the Paragon Bank. The Paragon Bank offers special lending which is absent in the mainstream banks and has since become a charging bank (Banker, 2011). Being a specialist lender Paragon Group is able to monitor the movements of interest rates thus establishing mitigation measures that ensure the company’s operations are not affected by the low rates. The company and its management are very ambitious and take risks and available opportunities. For example, in the year 2007-2008 the company took advantage of the difficult situation in the financial industry where banks were unable to lend. Paragon utilized the opportunity and started its loan servicing operations on behalf of the financial institutions. Implementation and provision of loan servicing were made possible due to the highly skilled workforce at Paragon. Employees at Paragon had transferable skills which were utilized in loan servicing hence easy and smooth assimilation of the business.

Leadership

Paragon Group encompasses a hierarchical leadership where the leadership is from the top (Voon, Ngui, and Ayob, 2011). The company is headed by the CEO, Nigel Torrington. Nigel Torrington has worked for Paragon group for about 30 years and has served as the CEO for 20 years. The CEO has extensive knowledge about the market as he has seen the company grow, develop and diversify into other operation. An added advantage is that the CEO has influence in the parliament where he is able to contribute to the formulation of laws, regulation, and policies concerning lending and the economy as a whole. Nigel has a very strong personal leadership style which is evident due to his popularity, his engagement with employees and the numerous service awards he has received.

The type of leadership implemented at Paragon is the transformational leadership style. Through transformational leadership, the leaders at paragon inspire, motivate and encourage employees in order to achieve the company’s goals and objectives (Eagly, 2003). The leadership inspires the employees to be innovative which is evident in the Paragon group. The leadership is diluted throughout the organization where the employees at different levels contribute ideas by thinking strategically to increase productivity in the company (Hill, Jones, and Schilling, 2014). Decisions are made at different levels in the organization with the board of directors having the final word. A major problem that can be identified in the transformational leadership is that the middle management layer is not inspired and innovative as the company would expect.

Team leadership at Paragon is strong as the team leaders’ clearly communicate the company’s objectives and goals. The communication ensures that the team members’ activities are geared towards achieving the set goals. The organization follows specific plans that each leader is expected to guide team members into implementing and transforming the plans into objectives. The team members undergo occasional training and coaching which ensures that they have a clear direction of what is expected of them. Various activities such as rewards motivate the employees and also support them in various engagements. The leadership at Paragon welcomes change as it’s a core competency. The company assimilates change to increase performance and more productivity. The company is flexible enough hence adapts to change quickly without affecting its operations. There is high resilience in the company in case a change implemented affects the company thus enabling employees to cope during the transition time. The changes experienced in the company include change into different job roles and assimilation of new roles for the company’s growth. Managers play a great role in helping employees adopt new roles as they are many uncertainties brought about by change.

Paragon incorporates a culture of expectation where the employees are expected to adapt and align with the changes made. The company operations and employees are very flexible which enables them to work in different fields. The employees are highly skilled hence are able to utilize their skills in performing different roles. Paragon is subjected to the numerous changes in the money market and the changes have been fueled by Brexit which is the existing of the U.K from the European Union. Brexit has caused a lot of uncertainty in the financial market and the share prices are fluctuating daily (Clarke, Goodwin, Goodwin, and Whiteley, P., 2017). The changes in the demand and supply of stock affect the prices and there are uncertainties, where a company has to expect profits or losses.

Communication

Decision making at Paragon is facilitated by effective communication. The communication ensures that information related to plans, objective and company’s strategies are passed on effectively (Cornelissen, 2008). The executive board of the company meets to discuss and decide on productive strategies for the company. After deciding on the strategies, the executive board then meets up with the senior management of various discussions and informs them of the strategies. The senior management later holds a meeting with their team members to pass to them the strategies decided on. Communications regarding long term strategies are held every quarter of the company’s financial year. The senior management holds frequent meetings with their teams’ members to discuss and inform them about any developments in the company.

The frequent meeting ensures that the employees are aware of activities going on in the company. Also, the meetings with teams help in discussing ideas, opinion and also complains are forwarded among the small team meetings. Paragon Group also incorporate modern information technology in its communication (Cornelissen, 2008.). The company has an internal communication hub which is through social media. Through social media, the company posts various notices that concern all parties in the company. The notices include performance results and mid-year results. Through social media, video conversations are held with the CEO where he talks about performance and all employees are able to view. The company holds discussions and presentations on their success and challenges via social media. Communications via social media are convenient as employees can access the information at any given time from any location.

 

 

Issues affecting Paragon

Paragon is affected by various issues that limit its productivity and performance. The issues include fluctuation of share prices which are caused by changes in supply and demand of stock (Goodhart, Hofmann, and Segoviano, 2004). The changes cause uncertainty in the market thus hindering the company from achieving its objectives. Paragon experiences effects of the financial market volatility as the interest rates keep on changing (Brigo, and Mercurio, 2007). Low-interest rates indicate that the company will make losses and lack financial stability.  Political issues affecting the company include elections and Brexit. The exit by the U.K from European Union caused a decrease in the British Pound exchange rate against the dollar.

The Brexit has negatively affected the country as there is no much revenue generated from international trade and there is a decrease in value of the Euro against the dollar (Heisbourg, F., 2016.). There is a lack of litigation in the property market which is negative affects Paragon business. The property market is unstable across the country as the various areas have different property value. The changes in value have effects on mortgages as many people cannot afford the property mortgages. The financial and property market has since become crowded with many companies providing lending services. The new entries contribute to a decrease in demand and customer base as the customers have a wide range of providers to choose from.

Recommendations

Financial markets are very uncertain due to their volatility (Poon, and Granger, 2003). Paragon can avoid the risks brought about by the volatility by gathering vital information about the financial and also the property market. The information provides the company with sufficient knowledge which is useful in making predictions. The predictions will enable the company to engage in the buy and hold strategy which entails that the company is not affected by the short-term fluctuations (Yam, Yung, and Zhou, 2009). The buy-and-hold strategy will be communicated and implemented in the company to ensure that Paragon will achieve its 5-year plan which is a long-term value of the organization. Through the strategy, Paragon is able to maintain a strong balance sheet that registers consistent earnings. The strategy can be termed as the company adapting to change.

The uncertainty that has been brought about by Brexit affect the U.K economy by slowing the growth rate. There should be increased internal trade in the country to generate more income. Paragon should expand its operations in many regions across the country. Many locations will attract a large customer base and generate more income that can provide funds during low-interest rates. The lack of litigation has caused massive losses for the company as there are no legal actions in preventing fraudsters and illegal traders in the markets. The government should set rule and regulation that govern how transactions are carried out. There should be a definite market and product value across the country to facilitate healthy competition among all the service providers.

Implementation of Recommendations

The decision to implement the buy and hold strategy is a decision made by the Paragon group board. The board makes the decision by using available information and discussing the effectiveness and feasibility of the strategy. The strategy is implemented by passing information to senior management so that they guide their team members on activities to engage in. Through the buy and hold strategy, the company will buy the shares and sell them later when their value increases. The strategy will align with the company’s five years strategy and higher returns. The expansion of Paragon operations across the country is a broad and risky decision that calls for the feasibility of the company and employees. The decision is from the top management and is executed through transformational leadership. The leaders will inspire and motivate the employees to take up new roles and also work in new places in order to achieve the company’s objectives.

In the implementation of the expansion plans communication through social media will be very beneficial. Employees who will be assigned to a new location can be made video calls for a discussion with the management at the main office. Also, everyone in different areas will get timely notifications about the company’s results, operations, and development at any location and time. The CEO at Paragon has influence in parliament which will be used in ensuring that there is litigation on the property and financial market. His influence will be useful in the parliament as he is in a position to forward complain and issues facing the property and financial market. Also, through his influence, the CEO is in a position of offering opinions and ideas that can outline legal action to be implemented in litigation of the industries. Implementation of the recommendations requires a transformation leader style where employees are motivated and inspired to executed outline strategies. The main communication is from the top where board members make the decisions and the decisions are communicated to the junior staff by the senior management.

Reflection

The analysis of the strategic position of the Paragon group has been an interesting experience. The analysis has been through engaging an employee, Ann-Marie who works in the HR department as the head of the learning and developing the team. The analysis and interview with Anne-Marie have been very informative and increased my knowledge of the company’s position in the property and financial sectors. The information has been relevant as it has come at a time when there is active competition in the financial market and real estate. I have been able to appreciate employees and companies that provide lending serves as they play a big role in the property industry. Previously most of the financial institutions have been associated with theft which I have discovered is false as they provide funding in the economy and are affected by fluctuations.

Carrying out the analysis has broadened my knowledge and given me insight into what contributes to a company’s success that is good leadership and communication. I choose to analyze the Paragon group because it trades in a very competitive and active market. Also, the company deals with specialist lending where the company focuses mainly on three core operations. From the analysis, I have learned that diversification is an important tool for productivity and business growth. A major point learned is that when carrying out an interview and analysis it is appropriate to have an open mind in order to welcome all the information. In future interviews and analyses having an open mind and carrying out back group research will be helpful in order to understand and relate more with the information provided.

 

 

References

Acharya, V.V., Schnabl, P. and Suarez, G., 2013. Securitization without risk transfer. Journal of Financial Economics107(3), pp.515-536.

Banker, R.D., Hu, N., Pavlou, P.A. and Luftman, J., 2011. CIO reporting structure, strategic positioning, and firm performance. MIS quarterly, pp.487-504.

Brigo, D. and Mercurio, F., 2007. Interest rate models-theory and practice: with a smile, inflation, and credit. Springer Science & Business Media.

Clarke, H.D., Goodwin, M.J., Goodwin, M., and Whiteley, P., 2017. Brexit. Cambridge University Press.

Cornelissen, J.P., 2008. Corporate communication. The International Encyclopedia of Communication.

Cravens, D.W. and Piercy, N., 2006. Strategic marketing (Vol. 6). New York: McGraw-Hill.

Eagly, A.H., Johannesen-Schmidt, M.C., and Van Engen, M.L., 2003. Transformational, transactional, and laissez-faire leadership styles: a meta-analysis comparing women and men. Psychological Bulletin129(4), p.569.

Goodhart, C., Hofmann, B. and Segoviano, M., 2004. Bank regulation and macroeconomic fluctuations. Oxford review of economic Policy20(4), pp.591-615.

Graham, H., 2008. Marketing strategy and competitive positioning. Pearson Education India.

Gupta, A., 2013. Environment & PEST analysis: an approach to the external business environment. International Journal of Modern Social Sciences2(1), pp.34-43.

Ha, H. and Coghill, K., 2008. E-government in Singapore-a SWOT and PEST analysis. Asia-Pacific Social Science Review6(2), pp.103-130.

Heisbourg, F., 2016. Brexit and European security. Survival58(3), pp.13-22.

Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: Theory & cases: An integrated approach. Cengage Learning.

Ho, J.K.K., 2014. Formulation of a systemic PEST analysis for strategic analysis. European academic research2(5), pp.6478-6492.

Martin, A.D. and Hadley, D.J., 2008. Corporate environmental non‐reporting–a UK FTSE 350 perspective. Business Strategy and the Environment17(4), pp.245-259.

Poon, S.H. and Granger, C.W., 2003. Forecasting volatility in financial markets: A review. Journal of economic literature41(2), pp.478-539.

Saaty, T.L., 2008. Decision making with the analytic hierarchy process. International journal of services sciences1(1), pp.83-98.

Stephens, M. and Quilgars, D., 2008. Sub-prime mortgage lending in the UK. European Journal of Housing Policy8(2), pp.197-215.

Voon, M.L., Lo, M.C., Ngui, K.S. and Ayob, N.B., 2011. The influence of leadership styles on employees’ job satisfaction in public sector organizations in Malaysia. International Journal of Business, Management and Social Sciences2(1), pp.24-32.

Yam, S.C.P., Yung, S.P. and Zhou, W., 2009. Two rationales behind the ‘buy-and-hold or sell-at-once’strategy. Journal of Applied Probability46(3), pp.651-668.

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Paragon Group: Company Analysis | Get Homework Help . (2022, August 24). Essay Writing . Retrieved September 29, 2022, from https://www.essay-writing.com/samples/paragon-group/
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Paragon Group: Company Analysis | Get Homework Help . [online]. Available at: <https://www.essay-writing.com/samples/paragon-group/> [Accessed 29 Sep. 2022].
Paragon Group: Company Analysis | Get Homework Help [Internet]. Essay Writing . 2022 Aug 24 [cited 2022 Sep 29]. Available from: https://www.essay-writing.com/samples/paragon-group/
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