Strategic Analysis Assignment: Analysis On Approaches Adopted By Commonwealth Bank
Task: Based on your comprehensive analysis of this company you are to report to the company’s board of directors on the strategic options available and the one you would recommend for the company to pursue. You will need to take into account the company’s current situation and its ability to implement the strategy.
You will need to address the following issues: -
- Identify key strategic strengths and weaknesses of this company (using tools such as the value chain, VRIN/VRIO framework, core competencies and the BCG matrix).
- Identity the company’s current strategic approach by discussing its business-level strategy, corporatelevel strategy, international-level strategy and cooperative strategies.
- Develop and evaluate at least three new strategic options in-depth. - Provide some actionable recommendations for your preferred strategic option
In researching and presenting your analysis: -
- Use relevant market intelligence databases, media reports and company resources (see the Library website) to support and justify your observations.
- At least 10 different references should be included in your analysis. - Use relevant strategic frameworks, models (e.g. BCG matrix, dynamic SWOT, evaluation models)
- Make sure your written report is professionally presented. Make sure that the report is cohesive, analytical, and does not have conflicting information.
This project report on Strategic analysis assignment is based on a comprehensive analysis of the commonwealth bank which is situated in Australia. This report analyzes the strategies being followed by the bank and focuses on recommending some better strategies that can be integrated with the existing ones. For this purpose, the bank's current situation has been considered and the key strengths and weaknesses of the company have been identified with the help of various tools and techniques such as SWOT analysis, value chain approach, VRIN/ VRIO framework, BCG matrix, etc. Moreover, the bank’s current strategic approaches have been identified and evaluated to recommend some new strategic options so that actions can be taken for the suggested options.
The study explored in the Strategic analysis assignment is focusing on illustrating the several strategies adopted by Commonwealth Bank. Commonwealth Bank is a multinational bank that is situated in Australia and business across various countries such as New Zealand, Asia, and the United States, etc (Anggraini, 2019). This bank is also the largest in the southern hemisphere and is one of the four big Australian banks. This is because of the different strategies that the bank uses while working. This bank needs to focus on its existing strategic options and compare it with the requirements of the customers so that any changes required in the strategic options can be taken easily. This is possible only with the help of various tools and techniques which can help the bank to reflect its strengths and weaknesses and integrating various new strategies.
Key strategic strengths and weaknesses
As every company needs to identify its strengths and weaknesses, thus various tools and models have been used for determining the strategic strengths and weaknesses of the commonwealth (Bank et al. 2016). These frameworks include the value chain approach, VRIN/VRIO framework, core competencies, SWOT analysis, and BCG matrix, etc.
Value chain approach
Value chain analysis of Commonwealth Bank examined in the study obtained in this Strategic analysis assignment helps in the identification of those sources which can provide competitive advantages, complex interrelationships, and interdependencies, improved flow of materials, information and finances. According to this approach, there are some strengths as well as weaknesses of Commonwealth Bank which are as under:
- It provides high-quality services to its customers and has a diversified form of credit portfolios.
- It always focuses on implementing advanced technology in its working.
- Its main aim lies in improving the working environment of the bank and making it relevant to grow.
- As per the readings identified in the Strategic analysis assignment, it can also be noted that its robust capital ratios and financial position also comes under the strong values of the company.
- It is highly dependent on borrowing from offshore.
- Money laundering scandal
- It has it's working area limited to geographical diversity
- It's operating expenses cost very high. This is due to civil penalties and regulatory costs.
VRIN/VRIO framework examined in the context of this Strategic analysis assignment
VRIO stands for valuable, rare, imitable and organized activities and refers to a part of the company’s largest strategic scheme (Bank, 2017). It can also help the Commonwealth Bank to identify its competitive advantages by determining its various resources and capabilities. VRIO framework of Commonwealth Bank provides an internal and external look of the available resources and explains the level of competitive advantage available.
- Financial resources of Commonwealth Bank are highly valuable for it as they provide external opportunities to face external threats.
- Diversity in its product provides great advantages to its customers and thus this diversification of products is also valuable for the bank.
- Its cost structure is not valuable for it as its production methods lead to greater cost than its competitive companies and thus affect the overall profit.
- The study evolved in the Strategic analysis assignment examined that financial resources of Commonwealth Bank are rare for it as it is found only in few companies. Strong financial resources are not possessed by each company all the time.
- Highly trained and skilled staff of the bank is also rare as it is not in the case of other firms. Its better working environment makes its employees retain for a longer time.
- Different types of products are not rare in Commonwealth Bank as these are also available with other forms of the area.
- As a strong financial position has been attained by the bank after profits of a long period, thus it is typical to imitate by any other firm.
- Diversified products are not difficult to imitate as any competitive firm can attain these products by investing in the research and development area.
- Employees are also not difficult to imitate as these can easily be imitated by providing training and development skills to existing staff.
- Financial resources are being used by Commonwealth Bank strategically and always invested at the right place which can help in producing opportunities and eradicating weaknesses.
- Commonwealth Bank is not using its patent strategically. The patents are not being used to their full potential.
- According to VRIO, the distribution network of the bank is fully organized as it allows several customers to reach them easily.
What are the core competencies discussed in this segment of Strategic analysis assignment of Commonwealth Bank?
The segments covered in this Strategic analysis assignment mentions that there are four support divisions of Commonwealth Bank which provide the area to develop core competencies by the bank. These divisions include human resources, marketing, communication, and financial services. Commonwealth Bank has skilled and knowledgeable staff and employees always perform their duties with full potential, hence it comes under the category of core competencies (Barrett, 2017). Moreover, various types of market operations and other services like retail banking services, premium banking services, wealth management, etc. act as core competencies for Commonwealth Bank. As the retail banking services of the bank provide convenient banking and customized services, thus it helps the customers to attain their needs. Also, premium business services fulfill the premium needs of the clients which include clients from personal business, corporate business, and institutional business.
Moreover, the finding used to develop this Strategic analysis assignment indicates that its wealth management helps the bank to arrange the funds with the help of its support divisions such as distribution, communication, production, marketing, insurance, and other capabilities. Apart from these, international financial services provide the advantages of international growth opportunities to the bank.
The BCG matrix developed above within the Strategic analysis assignment can help in identifying the strategic needs and business level strategies of the Commonwealth Bank with the help of fur units namely, stars, cash cows, dogs, and question mark. It will identify which strategy of the bank falls under which category.
The financial services of Commonwealth Bank fall under the category of stars as it helps the bank to earn a significant amount of profit from it. The position of the bank among the list of banks is also a star in the BCG matrix of Commonwealth Bank. Moreover, its diversified products and services is a star which helps the bank to attract numerous customers.
It is also clear from the above matrix created in the Strategic analysis assignment that the Supply Chain Management strategy of the bank comes under the cash cows as it has helped the bank to earn significant amounts over the decades but not it is declining as the bank performs all the supplies on its own rather than outsourcing it. Innovation also comes under cash cows as it has also helped the company to grow well in the past few years but now the company is lacking in providing innovative products to customers.
As the company examined in the context of this Strategic analysis assignment is falling in providing innovative products to customers in the past few years, thus the company is facing losses also. This company needs to invest in research and development and thus this has created a question mark in the BCG matrix.
The dynamic environment of the market is the dog for the company as it sometimes has a negative impact on the Commonwealth Banks. However, the company might grow in the future with environmental changes that will change in the upcoming years.
SWOT analysis is a tool that can be used by the bank to identify its core strengths, weaknesses, opportunities and threats which the bank is facing nowadays. Strengths and weaknesses come under the category of internal analysis and opportunities and threats under the external analysis. It indicates that a detailed investigation has been carried on for achieving the research objectives used to develop this strategic analysis assignment.
· New products and product innovation
· High skilled and trained workforce and motivated employees
· Quality of services with the help of automation in bank products
· Strong financial position with the help of the free flow of cash
· Superb performance in the market
· Customer satisfaction
· Not being able to face the challenges prevailing in the market
· Not very good at grabbing opportunities and meeting the increased demand of customers
· Financial planning not done properly and inefficient use of cash
· As compared to other companies, high attrition of workforce
· High operating costs
· Low profitability ratio and net contribution percentage
· Diversification in the products and new revenue streams
· Stability in the market and lower inflation rate
· Innovation in products
· Increase in competitive activities as compared to other companies
· Stable free flow of cash
· Intense competition
· No regular innovation in products
· New technologies being developed by competitive firms
· Liability laws of the country
· Low-quality services to customers
Company’s current strategic approach
The current strategic approach of any company describes its strategy to invest and earn revenue and include the methods to compete with other firms (Gallimore et al. 2016). A per the readings considered in this strategic analysis assignment, Commonwealth Bank also uses various levels of strategies to maintain its position in the market. These strategic approaches help the company to provide a big picture of the organization and thus focusing more on its internal and external activities.
Business level strategy
Local marketing strategies of the Commonwealth Bank help the company to serve its customers with the best services. The manager of the bank looks after all the needs of the customers and fulfills them with the help of additional services along with innovational ones. Moreover, this also been clarified in this particular section of strategic analysis assignment that diversified products and automation in various services also help the bank to successfully implement its business strategy. Moreover, positive trends and credit history is another part of its business-level strategy along with premium and local financial services to customers being provided by Commonwealth Bank. As Commonwealth Bank understands the importance of customers thus it always focuses on fulfilling the increasing needs of customers with the help of different products and maintains the cost of sales and research and development cost.
Corporate level strategy
These strategies examined in the strategic analysis assignment are related to competition of the Commonwealth Bank in the market with other banks. This level of strategy affects the overall goals and objectives of the company. Developing innovative products and formulating long term policies by the commonwealth comes under the category of corporate-level strategy (Haisken-DeNew et al. 2019). It always focuses on improving customer perception and customer satisfaction and corporation of additional services to its working provides many other opportunities to Commonwealth Bank for its growth. Additionally, a strong financial position and trained and skilled staff is another part of the corporate level strategy being followed by the bank as it allows each individual to participate with the company.
International level strategy
As this type of strategy helps the Commonwealth Bank to develop efficiency across nations, thus Commonwealth Bank tries to create better customer response with the help of various strategies. Its multi-domestic strategy comprises of different types of products but with more local preferences. Considering the findings developed in the strategic analysis assignment, it can be stated that its main concern is the local audience and meeting their needs positively. Its global strategy involves just the opposite of a multi-domestic strategy and making minor modifications to products and services in various markets and gaining economies of scale by providing the same services in different markets (Henderson & Conifer, 2016). Along with these strategies, its transnational strategies involve balancing the needs of local preferences with the needs of the local audience of other countries. This strategy includes providing the same services with the same benefits in other countries also.
Commonwealth Bank gives significant importance to maintaining cooperation between government and industry’s needs. Commonwealth Bank understands the importance of customer needs and thus always takes great care to provide safety and security to their data. It also recognizes each mandatory access to data by the law and always follows additional obligations about maintaining and securing the data of the customers (Stanford et al. 2018). This provides an additional advantage of cooperation by the customers and acts as a cooperative level of strategy for the bank. Commonwealth Bank examined in the study developed in the strategic analysis assignment understands that a strong financial position and growth in innovation are possible only with the help of various strategies but the most important one is a cooperative strategy.
New strategic options
According to the research carried on the strategic analysis assignment, There are many other strategic options also which can help the Commonwealth Bank to gain better control over its activities and gain a better position in the market. These strategic options include digital innovation, meeting regulatory and compliance requirements and improving business processes (Indriani & Budiharto, 2016). These strategic options will help the bank to get better in-depth sight of its activities and business processes.
Commonwealth Bank can add innovative digital capabilities in its working as it will help the bank to make better connectivity with the customers and employees. It will not only enhance the brand of the bank but also provide many automation and functionality advantages to the bank. It will enhance the decision-making ability and advanced analytics advantages to be integrated with the existing techniques and tools (Williams, 2017). It will also help the bank to minimize its operating cost and reducing repetitive, low value and risk involved processes.
Meeting regulatory and compliance requirements
There are many organizations that have reacted positively towards regulatory orders and compliance and change their responses towards regulatory orders but there are some other organizations that have shown a proactive approach towards regulatory strategy and it is found that these types of organizations have been to establish a better business strategy. Thus, it can be affirmed in the study examined in this strategic analysis assignment that Commonwealth Bank needs to focus on maintaining these connections between regulatory and business strategies (Worthington, 2016). Managing regulatory activities must not be taken as an optional activity as it can help the bank to identify better ways to achieve the objectives effectively and efficiently.
Improving business processes
Adopting digitalization will not help the Commonwealth Bank to get better results until all the business processes are examined before automating them. This is because sometimes many organizations have not been so much successful in automating their business processes. Thus, the Commonwealth Bank must redesign its business process to make them paperless, improving workflows and automating them (Von Mises, 2016). The bank will need to rethink all the required steps to improve is business process and optimizing the improvement.
Commonwealth Bank needs to focus on certain areas to get an in-depth analysis of the strategic options suitable for the bank. Here are some recommendations which can help the bank to implement some useful options:
- Redesigning and enhancing the digital experience for customers will help the Commonwealth Bank to provide better services to customers.
- It needs to focus on enhancing data analytics capabilities to identify customer needs.
- It must try to find the ways that it can minimize its operating cost and thus better profitability.
- There is a need to invest in innovation in products by the commonwealth bank along with some investment in research and development.
- Employees and staff must be retrained from time to time to meet challenging and changing needs.
- It must also identify various components to improve the security and authentication of the data of the customers.
After analyzing the above study obtained in the Strategic analysis assignment, it can be stated that Commonwealth bank includes some strategic approaches such as business-level strategy, corporate-level strategy, international level strategy, and cooperative level strategy. These strategies have helped the bank to achieve a stable position in the market and growth prospects but still, there is a need to integrate various other strategic options. This is because of some weak areas where commonwealth bank is lagging in comparison to other banks. Thus this report on Strategic analysis assignment has provided some recommendations which can help the bank to eradicate and minimize those issues prevailing within the bank and provide strength to such areas.
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