Pinnacle Financial Partners has an advantage over other banks with its technology. In chapter 6 the book discusses how technological hardware and technological software can lead to a cost advantage for companies. Pinnacle uses technology to allow its customers to use any ATM in the country without a fee. This can be a cost advantage because the company is saving money by not having to purchase and maintain its own ATM machines and pay for locations to place them. Many of Pinnacle's competitors have ATM locations strategically placed throughout cities in the U.S. Pinnacle can gain a cost advantage because the company doesn't have that expense.

Background: Pinnacle targets small businesses and their owners (individuals with personal assets greater than $250,000.)

In terms of competitive advantage, Pinnacle has several elements that are worth mentioning.

1.       Pinnacle competes with larger banks that have many more branches than them. To get a leg up, Pinnacle has a courier deposit pick up system. This is a convenience to customers because they don’t have to go to the bank to make deposits.

2.       Pinnacle customers get unlimited usage of any ATM in the world with no surcharge fee. This is different from other banks who charge their customers a fee to use any ATM that’s not owned by their bank.

3.       Pinnacle invest a lot in its customer and attracting and retaining highly skilled employees. The company’s associate retention rate is 96 percent compared to an industry standard of 75 percent. It’s listed as one of Nashville’s best places to work.

These are just a few examples of items that are strengths for Pinnacle. In term of evaluating general managers look at the fact that Pinnacle targets experienced managers who have worked for their competitors. This shows that Pinnacle’s general managers are more qualified than the average general manager and this is a competitive advantage. Most of them also bring inside knowledge of their competitor’s operations.

When you look at VRIO, by offering conveniences like free ATM transactions and courier deposit pick up, Pinnacle has created value for its customers. A competitor can try to duplicate this, but these are just two examples that are part of a culture of innovative customer trends. This culture would be hard for competitors to duplicate because there are probably many small things that contribute to the overall customer experience.

Neutralizing the threat of rivals

Chapter four discusses evaluating opportunities. As I stated last week, Pinnacle purchased US Bancorp and the purchase allowed Pinnacle to enter three new markets. This was a smart move when you consider that an alternative strategy could have been for Pinnacle to enter the markets by opening its own branches. By purchasing US Bancorp, Pinnacle removed one if its rivals. The move also allowed Pinnacle to better compete with other rival banks in the market by entering with an established customer base.

Pinnacle also used the strategy of preemption of valuable assets. Pinnacle had an aggressive strategy of stealing top employees from competitors. Employees are a company’s most value asset.

Hello, one of the topics in Chapter 3 discusses threat of rivalry as an environmental threat and barrier to entering a new market. Pinnacle in January of 2017 expanded its operations into the new markets of North Carolina, South Carolina, and Virginia by purchasing North Carolina-based US Bancorp. This merger gives Pinnacle a new significant presence in Charlotte, Raleigh, Greensboro, Winston-Salem, N.C., and Greenville-Spartanburg and Charleston, S.C. Had Pinnacle tried to enter these markets on its own without the acquisition, the company would have faced significant competition from competitors such as Bank of America Corp., Wells Fargo, BB&T, Fifth Third, etc. Pinnacle would have had to purchase real estate for its branches and compete with existing branch locations from competitors that were already open and frequented by customers. By gobbling up U.S. Bancorp Pinnacle was able to overcome some of the significant barriers to entry and go into three new markets and compete on a level playing field with its rivals.

 

 

 

 Hello, the company I have selected to follow is Pinnacle Financial Partners Inc. (PNFP). Pinnacle is a financial services company based in Nashville, Tennessee that  operates 45 locations and is one of the fastest growing banks in the region.

 

Chapter 2 Blog Post

 

 



Chapter two of our book looks at firm performance and competitive advantage. Pinnacles states that its business strategy is excited associates (intentional creation of a great workplace), engaged clients (giving clients an experience they can't get from Pinnacles' competitors) and enriched shareholders (outsized shareholder returns). The company has used the strategy of growing its market share by acquiring competitors. Not only is Pinnacle buying entire companies, the company began its growth strategy by luring top employees from other Nashville banks. I thought this was a brilliant strategy because Pinnacle was a start up bank when it launched in 2000 the company set out on an aggressive growth strategy and was able to snag top employees who worked for their competitor who already had many years of experience and knew both the banking industry and the competitive landscape well. This gives Pinnacle a significant competitive advantage in the marketplace because not only do they have experienced employees, but they also have a team of executives who are made up almost entirely of people who worked for their competitors and have inside knowledge of what their competitors are doing and what their competitors strengths and weaknesses are.

 

Over the years, Pinnacle has continued to be named one of Nashville's best places to work.

 

I tried to come up with a Z score for Pinnacle but I learned that the Altman Z score does not apply to banks and insurance companies. I need to do more research on this because I would like to find out why.