Commonwealth bank of Australia is an Australian multinational bank with businesses across New Zealand, Asia, the United States and the United Kingdom. The variety of the financial services are provided by the bank such as retail, business and institutional banking, management of funds and superannuation, facility of the insurance an investment and broking services. The bank was funded in the December 1911, having headquarters at Darling harbour, Sydney and Australia. The current revenue of the bank is $26.004 billion. The bank was listed on the stock exchange in the year 1991 (Commonwealth Bank, 2014).
What industry is it?
The commonwealth bank falls under the category of the banking and the financial industry. The bank offers the premium services and brings together the financial insights. The bank is also involved in the facility of the personal chequing and business chequing and the certificates of the deposits. The facility of the loans whether the personal, educational or debt consolidation. The delivery of the financial services to the personal and the small business customers are the core features of the bank. The bank is also involved in delivering the Wealth Management which brings together the funds and the management to master the funds and support the business actively (Schlagwein, Thorogood and Willcocks, 2014).
Pestle
Pestle Analysis is basically the framework or the tool which is used by the marketers to analyse and monitor the macro environment and the factors affecting, and creating an impact on the organisation. The pestle analysis of the Common wealth bank Australia is as follows.
Political
Majorly two categories are included in the political analysis of the commonwealth bank which is the financial deregulation and the Privatisation. The main reason for changing the designation of the bank form the people’s bank to the private organisation is the ultimate result of the above two policies. This eventually led to the increase in the returns to the shareholders as well as the managers and also fulfilled the responsibility towards the community (Murray, et al 2014).
The major bridge is between the governments consisting of the privatisation ans the traditional policies infused by the Labour Party. There was a discontinuance of most of the explicit promise which created a political unrest at the short term level. As the rule of the financial deregulation was entering the country the banks started to emboss the fees and charges and cut down the services which ultimately utilised the collective power and the monopoly whenever possible (Macdonald, Burke and Stewart, 2017).
Major impact is that the common wealth bank ceased to provide the insurance free of cost to the profit oriented bank (Commonwealth Bank, 2014).
Economic
The economic factor also poses a greater contribution to the analysis of external factors that affect the organisation. The CBA capital positions are measured by the RAC and the standard benchmark. Therefore the CBA strengthens the level of the capital under the regulatory capital framework which creates a stronger impact on the operations of the Common wealth. In terms of the capital growth Australia still has opportunity to invest. Pure Investment strategies are viable options as the exchange in the rates of the currency are very favourable as compared to the euros, dollars and sterling (Willcocks and Reynolds, 2015).
Currently the GDP of the Australia is higher than that of UK, Germany and France. In the main cities unemployment is relatively low and on average the national unemployment figures stand at around 5% (Commonwealth Bank, 2014).
Technological
Taking about the technological factors, the CBA was the first Australian bank who cares about the customers and provides the access to the 24 hours banking service through EFTOS and ATM or telephone banking. The famous online broker and providing facilities like Net bank and communication sector (Wu, Song and Kang, 2016).
. Recently the innovations are CBA caching for Facebook like speedy and the secure the transactions with the help of the media. The smart sign allows the customers to manage the property of the loans via the documents electronically using the online portal. This innovation finally results in revamping of the interface of the customer of the commonwealth bank (Moosazadeh, Barimani, Mohammad and Eslami, 2016).
Social
The bank plays a vital role in assisting the society by offering the financial services and the literacy programs and by helping in having collaboration with the community organisation. This also helps in promoting the cross culture and broader community (Swot and Pestle.com, 2018).
For the youth and adult the commonwealth bank provides the greater availability to the educational facilities and mainly in financial literacy. The major effect of the social factor is that it helps to strengthen the bond of the organisation with the banks.
Environmental
In analysing the environmental factors of the organisation, the Commonwealth Bank of Australia is the biggest organisation that has a direct impact on the environment and the operations of the bank also suffers. The carbon Reduction Target is one of the tools towards the positive outlook in the environment and by supporting the clients of the group they are working upon the reduction of the emission of the carbon. There are several industries which get affected by the changes in the temperature such as farming, tourism and insurance.
The Environment Protection (Nuclear Codes) Act of 1978 mandates the development of uniform safety standards for uranium mining and milling and for the transport of radioactive materials (Swot and Pestle.com, 2018). The environmental analysis is carried out in order to replace the lighting and the upgrading heating caused by the air conditioners in the commercial buildings of the banks.
Legal
There are several programs imitated by the commonwealth bank of which one is the open advice review program for the customers of the common wealth game to retreat the poor advice on the financial services. The legal responsibility of the commonwealth bank is to include the policies of the negotiation. The bank plays a major role in the preparation and the focalizing the documentation of the customer.
The availability of the balances are affected by the number of the customers and there load of transactions and the deposits. To create a survey of the customers the independent review panel is created to bring the alignment with the commonwealth bank and its customers. The advocate group is the group of three firms of legal nature which are mainly selected by the users to access the data and overview the results (Commonwealth Bank, 2014).
Industry Environment
Bargaining power of the Customers
The large pool of the customers is eventually going to help the bank in two major ways. First it will reduce the bargaining power of the buyers and also side by side provide the different and various kinds of events to the firm to streamline its operations and volume of sales.
The techniques of the new and the innovative products are to be introduced by the common wealth bank to let the customers avail a heavy discount and to keep the customers entertained with new products and services.
Bargaining power of the suppliers
Suppliers in dominant position can decrease the margins Commonwealth Bank of Australia, therefore to tackle the bargaining power of the suppliers the commonwealth bank needs to upgrade the supply chain management and grab the multiple suppliers.
The innovative product designs and the creation of the schemes and the solutions is the ultimate goal of the bank so that if the prices and interest rates escalate then company can shift to other vendors (Dell’Atti, Trotta, Iannuzzi and Demaria, 2017).
Threats of new Entrants
To cope up with the threat of the new entrants, the company shall formulate and build the economies of scale to such an extent so that it helps to lower down the constant cost per unit.
The company shall also invest its funds in the department of the research and development and to enter the dynamic industry where the established players are performing. Moreover the company shall also focus on the standards which need to be followed (Wu, Song and Kang, 2016).
Availability of the substitutes
The availability of the substitutes is the major threat when the new product or the service are provide to the same kind of customers in different manner by the different companies under the same industry. In order to cope up with this situation the company shall be project oriented. There should be a development of the proper understanding of the customer’s need rather than its wants (Commonwealth Bank, 2014).
Rivalry among the existing players
If there is an extreme level of the rivalry among the players then it will surely take the prices to a lower level and the overall profitability of the industry is going to be marked down. To come out from such an intense situation the Commonwealth bank shall build a sustainable differentiation and develop the scale to compete with other industries at the high level (Morris and Metternicht, 2016).
Competitive Environment
Capabilities of the firm
Highly skilled workforce through the successful training and the learning programs is hired and available in order to give an edge over the competitors (Fisher, 2018).
The strong brand portfolio is also one of the reasons and the strength of the commonwealth bank that it continuously grows and settles. The successful track record of introducing the new products and the services and good returns on the capital expenditure by the bank has made it more successful (Morris and Metternicht, 2016).
Strategies the company follows
The strategies followed by the Commonwealth Bank Australia is “Go to market strategy” for its products and the services (Brzezinski, 2016).
The introduction of the taxation policy has the significant impact and results in the decreasing of the cost of transportation because of the low shipping charges and the cost of transportation of the documents is cost effective (Commonwealth Bank, 2014).
Opportunities
Majorly the commonwealth bank has a lot of opportunities such as expansion of the bank in the markets of Asia and other emerging markets which can help the bank to have a long term growth in future. The new technology provides an opportunity to the Commonwealth Bank of Australia to differentiate the strategy of the prices and to enable the bank to maintain its customers and also to propose the value oriented propositions (Janor, et al 2017).
The new opportunities will create a platform for the other simultaneous players to play at the front end in the industry. This ability of the bank provides the greater opportunity for the Commonwealth Bank of Australia to drive home the advance technology and to gain market share in the category of the new product (Gollan, 1968).
Threats
Apart from the opportunities there are several threats which required to be coping up through different products and services. There is no regular supply of the innovative products and over the years. The company can face various lawsuits and liability laws while exporting the services (Hussain, et al 2017).
Due to the intense competition and unstable profits the number of the players in the industry over the last two years which has put the pressure in the downward manner and the profitability also gets affected (Phillips, 2017).
Intangible Analysis
The analysis of the intangible assets is called the intangible analysis. The intangible analysis makes the company aware about the company’s intangible assets and the ability of the bank to set apart the goodwill and brand value which the banks help to evaluate the resources.
Australian market sector investment in intangibles is large and has grown considerably over time and the firms resources comprise of the tangible as well as the intangible assets (Dixon, and Finnane, 2018).
The intangible assets have been decreased as compared to the previous year from $2459 to $1692 in the financial year 2017. While in the year 2014 and 2015 respectively the increase reflected a higher derivative asset balances due to foreign exchange volatility (Commonwealth Bank, 2014).
Capabilities of the Commonwealth Bank
Through the financial crisis, the Commonwealth stand stood as a pillar in critical way and the Australians are satisfied with their money being safe and secure (Hodge, 2018). The major ability of the commonwealth bank is to look after the deposits and savings of the customers.
The strong brand portfolio is also one of the reasons and the strength of the commonwealth bank that it continuously grows and settles. Through the global financial crisis we learnt that the Group’s strength and stability makes us an organisation Australians trust to look after their money.
Core competency Test
To identify the core competencies of the bank and to evaluate whether the bank is functioning properly or not and whether the loans that have been given to the clients are recorded properly or not or whether the Commonwealth bank has allowed the segregation of the incomes and expenses according to the proper accounting policies and relevant provisions.
Basically according to the core competency tests the capability of the bank to provide the financial services come under the category of the Resources in which the determination of whether the resources are capable enough to provide the services to the customers (Commonwealth Bank, 2014).
Capabilities on the other hand are the various possibilities that the bank has to fulfil in order to satisfy the customers and to provide the benefits. Under this scenario the bank has to enhance the strategies and capabilities.
Information system solution and evaluation of systems
The best information system is the automation of the data and the operations in order to meet the needs of the customers easily and to manage the existing products. In case of modification of the existing products the bank is required to follow the policy of the quality as well as the quantity (Abbott, 2018).
The non-verbal solution is the mechanism that is used in case of the service sector. In case of the commonwealth bank the services can be availed by the customers and whether they have been served properly or not can be decided on the basis of the response from the customers. Therefore it is expected from the organization to also utilise the other mechanisms such as hoarding, banners and advertisement at the workplace (Pearson, 2017).
Loyalty programs can also be a great source of alternative to build the Interaction between the management and the employees to enhance the relationship. The staff are the internal customers of the organisation and therefore the policies shall also be devised for them as well.
References
Abbott, M., (2018) Markets and the State: Microeconomic Policy in Australia. Routledge.
Brzezinski, Z.K., (2016) Russia and the Commonwealth of Independent States: documents, data, and analysis. Routledge.
Commonwealth Bank, (2014) Our Strategy
Dell’Atti, S., Trotta, A., Iannuzzi, A.P. and Demaria, F., (2017) Corporate social responsibility engagement as a determinant of bank reputation: An empirical analysis. Corporate Social Responsibility and Environmental Management, 24(6), pp.589-605.
Dixon, K. and Finnane, G., (2018) S is for stakeholders, not shareholders: The shift in board responsibility. Governance Directions, 70(6), p.322.
Fisher, N.I., (2018) Stakeholder Value as an Organizing Principle for Strategic Planning. Journal of Creating Value, pp.23
Gollan, R., (1968) The Commonwealth Bank of Australia; origins and early history. Canberra, Australian National University Press.
Hodge, G., (2018) Privatization: An international review of performance. California : Routledge.
Hussain, S., Ryan, M., Cripps, H. and Lambert, C., (2017) Role of social media in handling a crisis situation: A case study of Commonwealth Bank of Australia (CBA).
Janor, H., Yakob, R., Hashim, N.A., Zanariah, Z. and Wel, C.A.C., (2017) Financial literacy and investment decisions in Malaysia and United Kingdom: A comparative analysis. Geografia-Malaysian Journal of Society and Space, 12(2).
Macdonald, I., Burke, C. and Stewart, K., (2017) Systems leadership: Creating positive organisations. California: Routledge.
Moosazadeh, H., Barimani, P., Mohammad, S.D. and Eslami, A., (2016) Developing Strategies to Improve Knowledge-Based Resistive Economy Using SWOT Model. International Journal of Resistive Economics, 4(4), pp.96-108.
Morris, A. and Metternicht, G., (2016) Assessing effectiveness of WEEE management policy in Australia. Journal of environmental management, 181, pp.218-230.
Murray, D., Davis, K., Dunn, C., Hewson, C. and McNamee, B., (2014) Financial system inquiry.
Pearson, G., (2017) Further challenges for Australian consumer law. In Consumer Law and Socioeconomic Development (pp. 287-305). Springer, Cham.
Phillips, N., (2017) Legal threat exposes gaps in climate-change planning. Nature News, 548(7669), p.508.
Schlagwein, D., Thorogood, A. and Willcocks, L.P., (2014) How Commonwealth Bank of Australia Gained Benefits Using a Standards-Based, Multi-Provider Cloud Model. MIS Quarterly Executive, 13(4).
Swot and Pestle.com, (2018) Commonwealth Bank of Australia
Willcocks, L. and Reynolds, P., (2015) The Commonwealth Bank of Australia–strategizing from outsourcing to the cloud part 1: perennial challenges amidst turbulent technology. Journal of Information Technology Teaching Cases, 4(2), pp.86-98.
Wu, F., Song, D. and Kang, L.S., (2016) The Development of Commercial Bank E-Commerce Finance’s SWOT Analysis. DEStech Transactions on Environment, Energy and Earth Sciences, (peee).
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