The Australia and New Zealand Banking Group Limited, which is commonly known as the ANZ Bank. ANZ is considered to be the third largest bank in terms of market capitalisation in Australia. The organization was established in the year 1835 and the headquarters are located in Melbourne, Australia. The report will be mainly based on the external and internal environmental analysis of ANZ Bank and the various management related challenges that are being faced by the bank in the market. ANZ has been considered to be the most sustainable banking organization in Australia. The organization has however faced many challenges in its operations in Australia due to the changes that have occurred in the environment in which it operates (Institutional.anz.com. 2018). The challenges faced by the bank will be analysed in the report.
External analysis
Porter’s Five Forces Analysis SWOT Analysis
TOWS matrix Blue Ocean StrategyThe blue ocean strategy is related to the establishment of an organization in an area where the competition is low. This strategy can be applied successfully to various industries and business organizations.
The strategy is related to the search of the business sectors where less number of firms operate. The ANZ Bank operates in an industry where the levels of competition are quite high.
The situation in which the bank operates can be thereby referred to as the red ocean. The strategies that are required in a highly competitive market are totally different from the strategies that are required to be applied in the markets with low competition. The blue ocean strategy can be applied to the ANZ Bank to provide huge facilities to the various corporate organizations with the help of its institutional banking related facilities (Barkema and Chvyrkov 2017)
Generic Strategy MatrixCompetitive AdvantageLower Cost
Differentiation Industry Analysis
The banking industry of Australia is mainly similar to the oligopoly structure where threats of minimising competition are present. The performance, structure and the performance of the banks is important in the Australian market.
The Australian industry is mainly dominated by four major banks which are threatening the competition in the market. The four largest retail banks of Australia are, Westpac Banking Corporation, Commonwealth Bank of Australia, Australian and New Zealand Group (ANZ) and the National Australia Bank (NAB). The banking system in Australia is transparent and reliable in nature.
The Australian banks have not operated under huge limitations in the past. The difference between the investment banks and the retail banks have decreased in the recent banking environment of Australia (Peppard and Ward 2016). The banking system of the country has been facing huge number of changes in the recent times.
The range of services provided by the retail banks in Australia have increased and the non-Australian banks are being allowed to operate in the wholesale sector. The regulations that are related to banking in Australia are have undergone huge number of changes in the modern banking environment. The monetary policy and payment regulatory system is set by the Reserve Bank of Australia or RBA. The ANZ bank is thereby facing many challenges while operating in the fast-changing Australian banking related environment (Slater 2015)
Internal analysis McKinsey 7s FrameworkThis strategy is related to the various aspects of the organization which need to be analysed to discuss about the various changes that have taken place in the internal environment. The 7s of McKinsey’s framework can be described as follows,
VRIO AnalysisValue – The products that are offered by ANZ bank are valuable for the various institutional customers of the organization. The bank holds high values in the Australian banking industry.Rarity – The products and the services that are offered by ANZ bank are not rare and can be easily imitated by the other organizations operating in the same industry.Imitability – The level of imitability of the products that are offered by ANZ bank are high as similar products can be offered by the other banks who are main competitors of ANZ in the industry.Organization – ANZ however has an effective supply chain and the team of the top executives are able to provide the highest levels of services to the customers (Vishnevskiy, Karasev and Meissner 2016).
Resource based viewThe resource based view of the organizations help in analysing the internal capabilities that are gained and the resources that have been obtained from VRIO framework. The strategy that has been developed by the organization is also a major part of the resource based view. ANZ bank has a strategy which is related to provide the best services to the institutional and the individual customers. The tangible resources of the bank include, the employees, the high level services and the various options related to investment provided to the customers. The bank has also maintained its competitive advantage over the other organizations with the help of its strategies which have been changes according to the needs (Dagnino, King and Tienari 2017).
Value Chain analysis
Resource strengthsThe resource related strength of ANZ Bank is quite high as the organization has a strong financial backup which is main reason behind its sustainable operations in the Australian banking industry. The strength of resources of the ANZ bank have also helped the organization to implement the latest technologies in the various operations of the bank.
Internal challenges faced by ANZ BankThe internal management related challenges that are now being faced by ANZ are mainly related to three important factors which are, the changing preferences of the customers, the pressures that have been created due to increased use of technology and the commitment of the management towards Agile model of ANZ bank.
As has discussed earlier in the internal analysis that the bank is changing its working process from traditional model to agile model which has required huge number of changes. The changes that have taken place in the external technological environment have put immense pressure on the revenues of the bank as they need to implement new and improved technologies (Yoo and Reed 2015). The customers have also become much more demanding in the modern business environment. The different organizations thereby require different types of facilities from the bank. The transformation that is required in the operations of the bank with respect to the three most important aspects are digital, financial and cultural
External challenges faced by ANZ BankThe external analysis of the bank has depicted that globalisation has affected the operations of ANZ bank in a huge manner. The organization has been affected by the policies of the governments, the economic conditions and the technological capabilities of various countries in its global operations.
The increase of digital operations in the various countries have also affected the revenues of the bank. The different institutions are also implementing various digital banking related facilities in their operations which need to be provided by ANZ. The needs of the institutional customers have also started shifting in the current business environment. ANZ bank also needs to change its operations to supply these facilities to the organizations (Yoo and Reed 2015).
Problem StatementThe major challenge that is faced by ANZ bank in the industry according to the internal and external analysis that has been done in the report is based on the changes that need to made related to strategy and customer experience. The bank needs to implement the various insights that have been gathered from the review of the internal and the external environment.
This will help the organization in formulating effective strategies to integrate the technologies within the systems. The management further needs to improve the experience that is provided to the institutional customers as they are the most important part of the operations of the bank in the industry. The improvement of customer experience will further lead to the increase of profitability of the organization (Institutional.anz.com. 2018)
Conclusion
The report can be concluded by stating that ANZ bank needs to improve its operations by implementing the modern banking related techniques so that the institutional customers are provided with the services that they demand. The pressure that is put on the bank due to the internal and the external factors have been the major reason behind the various challenges faced by the management.
The services of the bank can be improved by using the results of the analysis and bringing changes in the strategies that are applied by the organization. This will help the bank to maintain its competitive position in the market and compete with the other major players in the industry. The bank can also try to improve its position as compared to its competitors and further increase its global presence to a large extent. This will assist in the growth of the organization in the Australian banking industry.
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Political- |
· The issues that are faced due to the regulatory bodies. · The implications of the Trans-Council policies. · The instability in the political environment has caused issues in the operations of ANZ Bank. |
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Economic – |
· The economic growth of the country has affected the revenues of the bank. · The growth phase of the Australian economy has affected the growth of ANZ Bank in a positive manner. · The growth rate of the bank in New Zealand is however not quite high. |
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Social – |
· The social environment of the country where ANZ Bank operates has an effect on its revenues and the type of borrowers. · The negative social factors have affected the profitability of ANZ Bank in a negative manner (Hill, Jones and Schilling 2014). |
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Technological – |
· The technological factors are also a major part of the customer satisfaction and operational efficiency of the bank. · The ANZ bank is committed towards providing services related to high technologies to the customers. |
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Legal – |
· The bank needs to comply with the various rules and regulation that are formulated by the various regulatory bodies. · The ANZ bank is affected by the rules and the jurisdiction of the different countries in which it operates (Steinbach et al. 2017). |
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Environmental – |
· The external environment in which the bank operates affects its operations. · The ANZ bank is known in the industry for its sustainable operations. · The effects of the operations of ANZ bank is quite low on the environment. |
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Competitive rivalry – |
The levels of competitive rivalry are high in the banking and the financial industry. The changes that take place in the technologies and the global competition affect the competitors of ANZ Bank in the industry. The bank has the aim of building a strategy to build an organization which is connected in nature. |
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Threats related to substitutes – |
The threat related to substitutes in the banking industry is high and the customers have the opportunity to choose from the products form the range provided by many other organizations (Wheelen et al. 2017). |
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Threats related to new entrants – |
The new entrants in the banking industry are quite high. The barriers towards new entry can be the regulations of the government. The opportunities that are provided to the new entrants are related to the technology that is used by them and the deconstruction. |
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Buyer power – |
The bargaining power of the buyers of ANZ Bank is considered to be from the range of low to moderate. The retail customers provide 7.15 billion dollars of revenue and the commercial customers provide 4.39 billion dollars. |
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Supplier power – |
The power of the suppliers in the banking industry is moderate. The various suppliers of ANZ Bank include, IBM, Oracle, PWC, Dell, Telstra, Officeworks, Deloitte, KPMG and many more (Morschett, Schramm-Klein and Zentes 2015). |
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Strengths · ANZ is considered to be one of the biggest banks in Australia. · The diverse portfolio of products reduces the risks related to operations. · The organization has a high share in the Australian market. · The financial position of the bank is quite strong. · The financial services provided by the bank include, banking services, investments, assets finance (Frynas and Mellahi 2015). |
Weaknesses · The global presence of the bank is limited as compared to the other banks. · The competition that is provided by other organizations is high and this can reduce the shares of ANZ bank in the market. |
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Opportunities · ANZ was the first bank established in Australia which has received the license to conduct business in the retail sector. · The organization has high opportunities to grow in the Asian markets which include India and China (Durand, Grant and Madsen 2017). |
Threats · The deterioration in the economic conditions in Australia has affected the profitability of the ANZ Bank. · The fluctuations and the changes that have occurred in the banking system if Australia have also reduced the profitability of ANZ Bank. · The competition has in the various regions if Australia (Stead and Stead 2014). |
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Internal Factors
External Factors |
Strengths(S) · One of the largest banks in Australia. · The product portfolio of the bank is diverse in nature. · The financial position of the bank is strong in nature (Rees and Smith 2017). |
Weaknesses(W) · The global exposure of the bank is limited. · The bank has to face strong competition in the financial industry (Carroll, Primo and Richter 2016). |
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Opportunities(O) · The first Australian bank which has received license to operate in the retail industry. · The organization huge opportunities to grow in the markets like China and India (Engert, Rauter and Baumgartner2016). |
SO Strategies · The huge brand name and awareness about the bank can be used for the increasing its operations in the Asian market. · The high amount of financial backup can be used for the purpose of obtaining licenses of retail business (Karadag 2015). |
WO Strategies The limited global exposure of the organization can be increased with the help of growth related opportunities. The competition provided from the other players can be mitigated with the help of investing in the retail market (Dévényi 2016). |
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Threats(T) · The economic conditions of Australia have deteriorated and put immense pressure on the revenues of the bank. · The fluctuations and the changes that have occurred in the banking system have affected the operations of ANZ Bank (Hubbard, Rice and Galvin 2014).
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ST Strategies · The financial strength of the bank can be exploited to overcome the threat that is posed by the competitors. · The diverse portfolio of the bank can also be used to mitigate the effects of the competitors of the bank. |
WT Strategies · The lack of global exposure is a major weakness of the ANZ Bank. The mitigation of this weakness is possible by increasing its operations in the different countries. This will reduce the threat that is posed towards the bank by the competitors (Simon, Fischbach and Schoder 2014). |
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1. Cost Leadership The cost leadership related strategy has been employed by ANZ Bank. The organization is known in the industry for its sustainable operations. |
2. Differentiation The ANZ bank provides services and products for various types products and services that are offered to the different types of customers. The organization provides banking services to the corporates and the retail customers as well (Sakas, Vlachos and Nasiopoulos 2014). |
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3a. Cost Focus The bank is focussed towards the costs that are related to the services that are provided to the customers. The focus on the costs have enabled the bank to maintain sustainability in its operations. The strategy is aimed towards capturing new demands that are formulated in the market. |
3b. Differentiation focus The bank has also given special attention towards the different loyalty of the customers by trying to maintain a stable customer base. The bank thereby needs to implement the generic strategies in a successful manner to improve its revenues and profitability in the market (Meyer and Xin 2017). |
References
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