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Originally Posted by DOOM@ALL_CAPS
YesI thought I answered this at least partially in one of my questions but I should elaborate.
You did, and yes, elaboration is good. I'm playing doubting Thomas below because I think it is useful, not to slam your analysis...
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They have local branches which allows them to look at factors beyond a simple credit score (e.g. job stability, interview impressions, etc.)
Making loans based on interview impressions is legal in Canada? Completely illegal in the US...
How is their salesforce paid? If on commission (rather than loan performance), I'd suggest that every interview is likely to go swimmingly.
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A potential competitor may enter the industry by one of two ways. They can focus on operational efficiency, which would mean they most likely use call centers.
All a competitor needs to do is offer an interest rate .1% below NICK's to steal all the business and/or NOT require a face-to-face interview. Whether this would be a good idea or not is another matter, but if NICK is healthy, a slightly more efficient competitor would be healthy undercutting them.
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Or, they can mimic the NICK business model of local branches. However, it would be a bad business move to create a branch in a place that NICK already operates so NICK should continue to see high returns in the places they operate.
I don't know if you have noticed, but restaurants tend to open across the street from each other. Same for car dealerships, doctor's offices, etc. The general business rule of thumb is that if you know an area is profitable for a competitor, you [i]should[/] open up an office across the street from them.