Competitive Strategy Assignment: Case Analysis On Bank Of Queensland

Question

Task:
You are required to write a 2000-word business report on competitive strategy assignment in which you apply learning’s from the capstone topics and apply them to the organisation by undertaking additional research.

Answer

Executive Summary
The Bank of Queensland has taken several approaches to focus on the business of the organisation. The present competitive strategy assignment focuses on delivering knowledge regarding the competition strategy taken by the company. There are several strategies like launching new products and services, creating economics of sale, following cost leadership and more that the company has taken to improve its business model. The assignment has also stated certain recommendations that are based on the balanced scorecard of the company.

Introduction
The paper focus on the Bank of Queensland, established in 1863, is one of Australia's oldest and leading regional banks which still believes in the traditional discipline of a bank and the idea of the healthy customer relationship. This bank has 160 branches across Australia and is one of the most trusted banks which take pride in its relationship with its customers. The present assignment focuses on discussing the competition strategies that the Bank of Queensland uses to meet its competition in the market. The main focus of the present assignment is to deliver a clear review regarding the strategies taken by the organisation that includes strategies like cost leadership, differentiation and more. The competitive strategy assignment shall also include certain recommendations that are based on the balanced scorecard of the organisation. It shall also mention the tools necessary to measure the performance of the organisation and will provide detailed knowledge on strategies of the Bank of Queensland.

A summary of the organization’s strategy
Bank of Queensland limited faced several threats from their competitive firms where new entrants brought innovations, new methods, bargaining powers from their suppliers was a matter, even from their buyers and threat of replacement of products and services. Hence that worked as a pressure in the bank. Soon they applied competitive strategies to overcome those issues and emerge as a bank with a good value proposition. The bank also used many performance measurement tools to increase its utility such as KPI and performance appraisal methods and also provided a scorecard so as to track the records of the bank’s effectiveness.

The organization’s approach to competition strategy
Some problems and their approaches are as follows:
New applicants to a bank have brought innovation, new business methods and pressure to the Bank of Queensland Limited by lowering the strategies related to pricing, lowering the costs and providing the customers with new and effective value propositions. Bank of Queensland now has to create effective barriers to protect its competitive advantage (Curley et al., 2020).

The few competitive strategies that Bank of Queensland thought of possessing to tackle the risk of new applicants are:

• By launching new products and services. The new product doesn't only attract new consumers but also gives their old customers a justified reason to buy the products of Bank of Queensland Limited.
• By creating and increasing economies of scale to reduce the unit costs that are fixed.
• By increasing their investment in research and development of the company. Novices are then more unlikely to enter into a dynamic industry in which well-known companies such as Bank of Queensland Limited continue to set standards on a daily basis. This will deter new players in the industry.

Almost all companies in the banking sector purchase raw materials from multiple suppliers. The profit margin of the superior supplier may be lower than that of the Bank of Queensland Limited. There is a chance to win the market and the companies in the banking sector (Dwivedi et al., 2020). The overall effect of the supplier's higher market power is to reduce the overall profitability of the bank.

Some of the competitive strategies that Bank of Queensland thought of possessing to tackle the negotiating control of the dealers are:

• By establishing and implementing an effective supply chain with several providers or suppliers.
• By trying to increase the use of different raw materials for product design so that as the price of one product rises, the company can switch to another product.
• By developing professional suppliers based on the company's business. For e.g., Bank of Queensland Limited can take lesson from Walmart and Nike that how these companies create third-party suppliers whose business depends totally on them. This has created a situation where the market power of third parties is significantly lower than that of Walmart and Nike.

When new products or services meet the needs of customers who are similar but in different ways, the profitability of the organization will be compromised. For example, services like Dropbox and Google Drive are replacing the market of hardware drives. If the product or service has a value proposition, the risk of replacing them is high. This is significantly different from the current industry offerings.

Competitive strategies that Bank of Queensland thought of possessing to tackle the threat of substitution of products and services are:

• By being service oriented and not just focusing on products.
• By understanding the basic needs of customers, rather than for what or why they buy.
• By increasing customer substituting costs.

Apart from these, Bank of Queensland limited also follows Porter’s Generic Strategic Mix which consists of:

• Cost leadership
• Differentiation
• Cost focus
• Differentiation focus

Cost leadership
This is the competitive advantage where the Bank of Queensland gains a competitive advantage in a mass market by being the lowest-cost provider. By being the lowest cost provider, the bank can charge lower prices and/or enjoy high-profit margins than rivals hence a customer's favourite.

This strategy is just that, it comprises becoming the cost leader in the organization or market. It is not enough to make it the cheapest provider, because it makes it vulnerable to low-cost attacks from other providers. So the firm can lower the price, thereby preventing attempts to increase market share (Frederico et al., 2020).

This strategy is mainly brought into work with large businesses which offer the customers with standard products with comparatively little or no differentiation that are usually accepted by the maximum of customers most of the time. Occasionally, a leader with low cost will also think of discounting the product to increase their sales, significantly if it has a vital cost advantage, over the competitor organization and, by doing so, it can increase into a higher share of the market.

Differentiation
This is a strategic factor where the Bank of Queensland aims to achieve a competitive advantage by offering something unique in a mass-market but at higher/premium prices (Yi et al., 2021).

This strategy generally involves assigning increased prices to products or services, usually to focus on higher manufacturing prices and other value-added features available to the customers.

The term differentiation basically refers to setting a price at a premium rate that not only covers additional production costs but also gives buyers obvious reasons to choose this product instead of other less differentiated products (Mamabolo and Myres, 2020).

Differentiation is to make the service or the products more attractive or purchasable than their competitors' services or products. How this is done usually depends on the specific organization or the industry and the service or product itself, but it seldom considers features, functions, reliability, and several more. It also includes factors like the brand image that the customers value. To implement the differentiation strategy successfully, the Bank of Queensland needs good research, innovation and development. It should also have the ability to produce and provide high-quality services or products (Nankivell, 2020). It also requires effective sales and marketing to let the market understand that large companies are adopting differentiated strategies must maintain flexibility in the development of new products, otherwise, competitors may be attacked in different ways through defocusing strategies.

Cost focus
This is a strategy where the Bank of Queensland aims to achieve a competitive advantage by being the lowest cost provider in a niche market. By being the less cost provided the firm can charge lower prices and or enjoy higher profit margins than the rivals, hence a customer's favourite (Ozbekler and Ozturkoglu, 2020).

So, the focus on cost basically refers to organizations that want to take advantage of lower costs, but only in a small market. The price is higher and will be accepted by enough customers to make a profit.

Differentiation focus
This is a strategy where the Bank of Queensland aims to achieve a competitive advantage by offering something unique in a niche market but higher or premium prices (Nasuka and Hasbullah, 2020). The unique consumer needs of the segment suggest that there are possibilities to offer merchandise which might be without a doubt unique from competition that can be targeting a wide institution of clients. The crucial trouble for any enterprise adopting this approach is to make certain that clients in reality also have unique wants and needs. In different words, it can be stated that there may be a legitimate foundation present for the factors of differentiation and that present competitor's products aren't actually meeting one's wants and needs.

About the focus strategy
Organizations that use the “focus” strategy focus on specific niche markets and develop low-cost or market-oriented products to understand needs of the customers along with market dynamics. They also have the tendency to generate significant brand loyalty within their customers. Therefore, it usually reduces the attractiveness of the market to the competitors of the company. As with a comprehensive marketing strategy, once a method is chosen, it is still vital to decide whether to be cost-leading or differentiated (Swire, 2020). Focus on strategy-focus is usually not enough, but whether the firm is using cost or a differentiated approach, the key to the success of an overall focus strategy is to ensure that it only focuses on one focus, thereby adding some special features due to the small size of the organization, cannot serve the larger market (if it does, it may compete with products from companies that have more resources in the broader market), so the last market segment will not work. The "extra" it adds, can help in the reduction of expenditure (perhaps with the knowledge and experience of professional suppliers) or increase differentiation (With the detailed understanding of consumer needs).

Performance measurement and the balanced scorecard
A. Key performance indicators (KPIs)
These are used to measure the extent to which a company, business unit, project or individual achieves its strategic goals. Well-designed KPIs are important navigation tools, and can clearly understand the current performance level and whether the company is where it should be. BOQ business continued to pursue a growth strategy in the niche target market segment in the fiscal year 2019 by providing its customers with tailor-made relationship citations. The bank focuses on the subdivisions of corporate health and retirement, hotels, tourism, and agro industry, and continues to diversify its loan portfolio by geography, manufacturing, and asset class. During this period, BOQ Finance's loans increased substantially. During the year, the balance sheet increased by $667 million, or 15%. Equipment, company financing and new structured plans (Parker and Lawrence, 2020).

B. Performance appraisals
The performance appraisal system solves the usually complex and tedious tasks in the audit process and make it efficient and effective for managers and employees. However, online performance appraisal systems have a greater business impact than simply saving time by putting performance evaluation information in a centralized formal environment (Setiawan and Rachman, 2020). Managers can also more easily discuss business strategies and set goals for the company that are measurable, which in turn provides management with significant tools to measure individual performance in the organization, determine the best development plan, and formulate performance reward plans. When employees believe that the system can provide fair remuneration and remuneration, employee engagement and retention will be improved.

The balanced scorecard for the community-based Bank of Queensland

Recommendations

• The bank is stressed to cope with rising costs and regulatory requirements. Unless a competitive mortgage compliance process is in place, it will be difficult for BOQ to expand its home loan portfolio without excessively reducing profit margins.
• The best strategy is for the bank to contend with its main competitors. Bank of Queensland being a large bank, its performance should be better than other large banks.
• As part of the initial registration, partners can set up a package with a daily limit of loan and it will make an effect immediately.
• BOQ does not allow NFC payments and has no plans to do so. It can take up to 2 days to transfer money to other institutions via BOQ immediately. So, they should clearly enable NFC payments for customer satisfaction.
• PayID to make payments or Visa debit cards cannot be used to make payments over the phone, because these cards cannot automatically make payments over the phone. BOQ needs to keep up with technology trends to improve its business.

Conclusion
From the above competitive strategy assignment, it can be concluded that the Bank of Queensland has taken certain significant approaches to solving their problems. One of the major approaches is by launching new products and creating economies of scale. The assignment has mentioned several other factors and has also recommended the company based on the balanced scorecard. It can be stated that measuring the performance of the company also needs tools like key performance indicators and performance appraisals that can help in measuring the performance of the organisation.

References
Curley, C., Levine Daniel, J., Walk, M. and Harrison, N., 2021. Competition and Collaboration in the Nonprofit Sector: Identifying the Potential for Cognitive Dissonance. Administration & Society, p.00953997211005834.

Dwivedi, R., Prasad, K., Mandal, N., Singh, S., Vardhan, M. and Pamucar, D., 2021. Performance evaluation of an insurance company using an integrated Balanced Scorecard (BSC) and Best-Worst Method (BWM). Decision Making: Applications in Management and Engineering, 4(1), pp.33-50.

Frederico, G.F., Garza-Reyes, J.A., Kumar, A. and Kumar, V., 2020. Performance measurement for supply chains in the Industry 4.0 era: a balanced scorecard approach. International Journal of Productivity and Performance Management.

Mamabolo, A. and Myres, K., 2020. Performance measurement in emerging market social enterprises using a balanced scorecard. Journal of Social Entrepreneurship, 11(1), pp.65-87.

Nankivell, P., 2020. The Liability of Australian Banks for Swiss Franc Loans. In Banks, Liability and Risk (pp. 309-347). Informa Law from Routledge.

Nasuka, D.S. and Hasbullah, H., 2020. Designing Performance Measurement with the Balanced Scorecard Method in the Tourism Service Industry. Competitive strategy assignment Journal of Industrial Engineering & Management Research, 1(4), pp.27-35.

Ozbekler, T.M. and Ozturkoglu, Y., 2020. Analysing the importance of sustainability?oriented service quality in competition environment. Business Strategy and the Environment, 29(3), pp.1504-1516.

Parker, D.W. and Lawrence, W.W., 2020. Improving productivity of a financial firm: business model evolution in the Caribbean. International Journal of Productivity and Performance Management.

Setiawan, A. and Rachman, A.A., 2020. Analysis of Company Performance Measurement using the Balanced Scorecard Method. Journal of Accounting Auditing and Business, 3(1), pp.82-90.

Swire, P., 2020. The Portability and Other Required Transfers Impact Assessment: Assessing Competition, Privacy, Cybersecurity, and Other Considerations. Privacy, Cybersecurity, and Other Considerations (September 8, 2020).

Yi, S., Yu, L. and Zhang, Z., 2021. Research on Pricing Strategy of Dual-Channel Supply Chain Based on Customer Value and Value-Added Service. Mathematics, 9(1), p.11.