City clients can be served better because we will be physically closer to them. Market for loans and deposits are perceived to be larger in the capital city. The population is 1 0 times bigger than Squares, therefore has more potential clients. Costly The expansion will cause the bank to apply for a loan thus increasing its liabilities. There is a high risk due to existing competition (national banks, preexisting rural banks, etc). It is hard to generate a breakable volume with respect to the expenses that would be incurred. B.
The business center in the capital city is close to their current city clients. There would be no more problems in finding a good location, since it is already in a business center, like IT Park. Attracts more clients because there are a lot of people in the said business center, and also the fact that the capital city population is ten times as large as Square. Gives them basis to decide on whether to pursue a full expansion on the area or not. Rent increases as time goes by. Meaning, there will be more expenses to be paid for. In addition, RIBS would have no control of the rent.
No bargains) There would be additional expenses for security, and the vault area would be in a risky location. ‘V. Recommendation To continue normal operations in Squares, the funds would be stagnant because they have the same clients. Also, their base in Squares has already reached its full potential Expanding the bank in the capital city by purchasing their own land for a new branch office would mean RIBS could be closer to its current clients and could attract more people, for the reason that the capital city population is ten times as large as the population in Squares.
Expanding the bank in the capital city could also imply good business because the market for loans and deposits were perceived to be larger there. But, land acquisition, building construction, necessary equipment and fixtures require RIBS to spend a lot of money. With this, renting a space in a business center in the capital city seems to be a better solution. Since it is still within the bounds of the capital city, RIBS could still be closer to its current clients and attract more customers and the fact that the business center is still in the capital city could mean DOD business because of the perceived market for loans and deposits.
However, renting a space in the business center would not give them the upper hand in controlling the rent, which alone increases as time passes by. In addition, they would need to spend more for the security of their location, especially their vault area, which is where they store their money, since they did not design their own building and other people would have blueprints to the business center. Renting a space for the meantime may provide the basis they need in order for them to decide on whether to pursue a full expansion n the near future or not. V.