Assessment of Santander Consumer Finance’s approach to its international strategy
In this report I provide a critical assessment of Santander Consumer Finance’s (SCF) approach to its international strategy. In the first part, I analyse SCF’s external environment by highlighting its history and business model and also by applying Porter’s five forces model. I follow by analysing SCF’s internal environment focusing on its structure and applying the resource based view model. I finish with a critical assessment of SCF’s strategy. In the second part, I evaluate SCF’s managerial implications by highlighting its strengths, weaknesses and potential solutions. Finally, I present some recommendations for SCF’s future strategy.
Introduction (Part A)
SCF is a subsidiary company of the Santander Group. This company started out as a small initiative that at the time of its creation was not expected to grow and transform into one of the most profitable units held by the group (Santander Consumer, n.d.). The company grew under the vision and leadership of its former Chief Executive Officer Juan Rodriguez Iniciarte and became the key player in the market for consumer finance. However, its journey to success is marked by the struggle against the market players and macroeconomic factors. A complete analysis of SCF’s international strategy can be broken down into three major portions: -
Analysis of SCF’s strategy
In order to evaluate SCF’s external strategy, let’s try first to understand SCF’s business model and look back at its history. Then, we will scan its external environment by using Porter’s five forces model which consists essentially in evaluating SCF’s ability to manage these forces, to overcome weaknesses exposed by these forces or to take advantage of opportunities offered by the alignment of these forces (B835 – Unit 2).
SCF’s history and business model
SCF was set up and developed in the European markets. Over the years, it has stretched its territory to other markets like America, Russia etc. Major portion of SCF’s business is concentrated in the auto-finance sector. SCF employed indirect sales methods to function in this sector. During the start of its operations, SCF had to give a lot of incentives to dealers because of the presence of strong competitors and other market forces (Harvard Business School, 2012). European Economies at that time were not integrated and national interest rates played a major role in determining the consumption trends in the population. Furthermore, the interest rates varied greatly from one country to the other. This is why SCF could not pursue a uniform policy in Europe (Harvard Business School, 2012). The industry for consumer finance was still pretty much in hand of large manufacturing units (e.g. car manufacturers) that provided the customer an option of financing the product. However, SCF’s major revenue came from indirect sales. In a way, the trend set was unfavourable for the company, but the marketing strategy of the company did well to counter this trend set and create space for SCF in the industry. SCF focused on converting its indirect sales into direct ones. SCF was directly in competition with national banks in the European countries, automobile manufacturers and large commercial banks (Harvard Business School, 2012). b.
Porter’s five forces applied to SCF
The model below shows the five forces that play major role in determining the competitive intensity of any market. If the company and the industry in which it operates are analysed, then it enable to evaluate this industry for intensity and competition (B835, Unit 2).
The threat of substitute product does not play such an important role in this industry. This is because this is only a service product and the only thing that can vary are the interest rates being charged. Also,...
References: (Accessed 15th November 2012).
Reuters (2012/03/06), Bank of Beijing Co., Ltd., Banco Santander SA Partner On Consumer Financing [online],
(Accessed 15th November 2012).
The Open University (2012) B835 Strategy, Unit 2, ‘Understanding the industry environment’, Milton Keynes, The Open University
The Open University (2012) B835 Strategy, Unit 3, ‘The evolution of the RBV’, Milton Keynes, The Open University.
Trumbull, G., Corsi, E., Barron, A. (2010), Santander Consumer Finance, Harvard Business School, 13th December 2010
Santander Consumer (n.d.), Our History [online],
(Accessed 28th October 2012).
(Accessed 28th October 2012).
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