Supply Change, Case 1
Aronson Saving and Loan is one of the few banks that has managed to keep their losses in check over three recessions, where other banks and saving institutions ended up having to declare bankruptcy or bail outs by the government. Aronson managed to stay afloat through all the uncertainty of the recession years. They kept a close eye on the amounts that they were loaning out and who they were making those loans to as well.
Eileen Aronson was in the leadership chair during most of those years. She had three different strategies that she could use to follow the banks activity and to project in advance any changes that might be coming that could impact the stability of their bank itself. She used exponential smoothing where x = .6. She also utilized trend analysis which gave her an actual graph of what the trends and changes were that were occurring in her bank at crucial times throughout the recessive years. She also used linear regression to pay attention to repetitive changes of similar size growth or loss to help her to strategically plan how she would handle the events before they actually happened. Please see work on next page.
Trend analysis appears to have been the most useful tool in her toolbox, as it provided her with a pattern to follow in the yearly ups and downs of Eileen Aronson’s banking empire. It provided valuable information on what would happen in future years but it also helped Eileen prepare for the worst case scenario from where the bank was financially at presently and prepare for that scenario. She was prepared in advance and that is why she was so successful at being able to sustain her banking empire.
If a part were to be left out, then it would probably be 1954, as it was like a blip on the screen and then the financial growth of the company fell back to a normal rate of growth. The numbers from 1954 were deceptive and because Aronson seemed to always watch for a minimum of two year trends before she changed her strategy, then 1954’s information would be left out completely. The trend analysis model still appears to be the most successful at strategically planning for the future of a bank.
1947 .6 1962 1.8 1977 4.2
1948 .6 1963 1.8 1978 4.2
1949 .6 1964 1.8 1979 4.2
1950 .6 1965 1.8 1982 4.2
1951 .6 1966 1.8 1983 4.2
1952 1.2 1967 1.8 1984 4.8
1953 1.2 1968 2.4 1985 4.8
1954 1.8 1969 2.4 1986 4.8
1955 1.2 1970 3.0 1987 4.8
1956 1.2 1971 3.0 1988 4.8
1957 1.2 1972 3.6 1989 4.8
1958 1.2 1973 3.6 1990 5.4
1959 1.2 1974 4.2
1960 1.2 1975 4.2
1961 1.2 1976 4.2
