The use of Asset-Backed Securitisation as a strategic control tool by Edcon's Onthecards Investments.
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This research report studies the application of Edcon's Asset-Backed Securitisation of OntheCards Investments in the retail industry. Asset-Backed Securitisation is a new concept in South Africa that has been largely practised in the financial sector. The research investigates Edcon's ability to adapt and apply the onerous and rigorous Asset-Backed Securitisation process to achieve their strategic and financial objectives. As Asset-Backed Securitisation is a new concept in South Africa, which was traditionally applied in the financial sector, the application of this tool in the retail industry would require drastic changes to the business practice of Edcon's credit operations and their strategic evaluation process. The first part of the research therefore concentrated on the evolution and theory of strategy. This discussion focussed on the evolution of the strategic planning process and eventually concluded with developments in the resource based theory. Strategic frameworks and evaluation techniques were also presented and reviewed. As part of the literature review, the theory on Asset-Backed Securitisation was also presented and International and South African Perspectives were reviewed with respect to the market for Asset-Backed Securitisation. Drawing from the literature review on strategy, a strategic evaluation model was developed for the evaluation of Edcon's strategic control tool of OntheCards Investments, their Asset-Backed Securitisation. The evaluation of OntheCards Investments was focussed on the structure of OntheCards Investments with respect to the theory of Asset-Backed Securitisation, an analysis of Edcon prior to the OntheCards Investments which took the form of a PEST Analysis, SWOT Analysis, Porter's Five Forces Model and a Life Cycle Analysis. The evaluation was concluded by conducting a v situational analysis of Edcon after OntheCards Investments and an assessment of OntheCards Investments with respect to its acceptability and suitability to Edcon's business. The conclusion drawn from the study was that Edcon had stretch goals and aspirations in OntheCards Investments. Edcon identified the critical success factors for OntheCards Investment and actively achieved the improvement in their credit management operations, which has now yielded an extreme competitive advantage that will not be easily imitated by their competition without major capital investment.