Discuss about the Role Of the Strategic Management In Australia and New Zealand Banking Group.
This paper reflects the details related to the strategic dilemma of the company that is Australia and New Zealand Banking Group which is formed by the presence of the cryptocurrencies in the market. The report shows major includes the strategic background, strategic environment with the help of the industrial organization model, competitive environment and the strategic analysis of the company. These all theories, framework, and model are used to analyze the external influences by the cryptocurrencies on a company. In the end, the paper reflects the suggestions to the company for addressing the risk generated by the digital currency in the market of Australia and New Zealand.
ANZ Groups is well-known groups in the market who perform its banking operations in both Australia and New Zealand market. The company came into existence 180 years ago with the head offices in Melbourne, Australia (ANZ Group, 2018). The group work with an objective to provide the effective banking and financial services that contribute to shape the communities and the people thrive. This is the only way through which the company can contribute in forming the balanced and maintainable economy with the help of which the people can enhance their life (ANZ Group, 2018). This section of the report also includes the major current decisions that are formed by the company. ANZ group has recently announced that they had reached an agreement to sell its 55% stake in Cambodian JV ANZ Royal Bank to J Trust, a well-known Japanese diversified financial holding company that is also listed on the Tokyo Stock Exchange (Reuters, 2018).
The section of the report includes the analysis of the external environment factors that influence the company. This strategic environment is explained with the help of the Industrial-organizational model and diamond model.
This model accepts an external perspective to describe that outside forces of the company signify on the strategic actions of the firms. This model is based on the assumption related to the external environment, competition in an industry, resources and the decision making of the company (Kraaijenbrink, Spender and Groen, 2010).
The diamond model of the porter is used to understand the competitive position of the nation in the global competition. This model is used to integrate Porter’s five forces theory with the competitive advantage (Riasi, 2015).
These models provide a path through which the company can easily analyze the external factors. Industrial-organizational model (I/O) is used in the PESTLE analysis mainly and the diamond model is used in Porter’s five forces model. Considering the model below given is the analysis of both PESTL Analysis and Porter’s five forces: –
PESTLE is one of the essential elements of the general external analysis that is including in the IO model (Pavlovski, 2015). This analysis has been conducted to analyse the factors like crypotocurrency that affect ANZ group working. The below given is the factors that influence the company: –
Political factors
The political factors include the impact due to change in the rules and regulations of the government considering the IO model. The geopolitical environment of the countries influences the banking services of the ANZ group. The government of New Zealand and Australia are together performing the numerous activities together which reflect they have strong political terms. The rules and regulations of both the countries support the operations of ANZ group (ANZ Group, 2018). Though, the operations of Australia are affected because of the acceptance of cryptocurrency. The government of Australia has decided to accept the use of the cryptocurrency and the people have started making the use of it (Bajpai, 2018). This has clearly created an impact on the profitability and operations of ANZ. The nature of the cryptocurrencies states that this is a threat or risk for the existence of the hard currency. Apart from Australia, there are many other countries who have accepted the use of cryptocurrencies. If the New Zealand government will allow the use of the digital currency in the market then the operations of the ANZ Group in the NZ will also get affected.
Along with this, the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry every banking companies should follow the guidelines and ensure that no misconduct activity is one of them. If any of the decision is formed by the Royal Commission then the ANZ group will get affected.
Economic factor
According to IO model, GDP of the country is one of the important elements of the economic factors. The economy of Australia is largest mixed market economies in the world with the GDP of AUD$1.69 trillion by the year 2017. On the other hand, the GD P of New Zealand is US$ 186.4 billion by the year 2017. The GDP of both the companies is improving which is a positive sign for the ANZ Group. The rise in the GDP of the company leads to the increase in the purchasing power of the company. The emergence of the cryptocurrencies has attracted the people and by taking the advantage of the purchasing power they invest a huge amount in digital currency (Pavlovski, 2015). This impact the working of ANZ Group along with this the supply of the money in the industry of banking and finance. This will also enforce the company to make the decision which will help them to grab the attention from cryptocurrencies to hard currency.
Social factors
ANZ group offer customers attractive services such as loan at low-interest rates, credit card benefits, investment and many others. The customers rely more on financial institutions because this is trustworthy for the company. Moreover, most of the people in Australia and New Zealand found that these institutions provide good knowledge related to the investment of their amount (Dermine, 2017). Though, this is also a fact that most of the people in the current scenario are investing the amount in Cryptocurrencies because they have found the heavy fluctuations in the prices due to which they can earn good profit. This has reduced the dependency and the change in the behavior of customers towards the banking industry due to high cost which is a threat to ANZ group. These currencies save the price of cost which they pay in banks (Cocco, Pinna, and Marchesi, 2017).
Technology factors
Technology has created the major impact by bringing the changes in the ways for handling the funds. The customer found smartphones through which they can handle their funds effectively from any location. ANZ group offer all the available services with the advanced technology (Chuang and Hu, 2015). Moreover, the group makes use of technology in communication as well. On the other hand, the Satoshi Nakamoto paper on bitcoin reflects the technology has brought the cryptocurrencies with the help of blockchain technology (Fanning and Centers, 2016). This currency is one of the peer-to-peer cash transaction systems. This emergence of blockchain technology has brought the way through which the people can manage their fund without involving any party or financial institution or government. Moreover, the customers can manage their own wallets and can transfer the funds with the help of digital signature (Nowi?ski and Kozma, 2017). This might influence the operations and work of the company.
Legal factors
According to IO model, the tax and regulations are one of the important aspects of the legal factors. ANZ group fulfills all the legal obligations through which they can perform the business operations effective. The group works under both Australian and New Zealand banking act along with this, the group also implement the Corporation Act. The company legalized the use of one of the well-known cryptocurrencies that are bitcoin (Bajpai, 2018). Though, the customers who are making use of this currency also have to pay taxes.
Environmental factors
ANZ ensues that they obey all the obligations related to the environment and social policies related to bring the welfare of the society. ANZ group promotes less use of the paper for which they make use of the updates and advanced technology (ANZ Group, 2018). This factor doesn’t create any influence on the operations of a company.
This model evaluates the competitive environment of the market in which ANZ group operates its business activities (Dobbs, 2014). This analysis has been conducted to analyse the factors like crypotocurrency that affect ANZ group working. This framework is related to the Diamond model.
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Threats of New Entrants |
· ANZ group do not have threats of new entrants because there is less number of entrepreneurs who like to spend the huge amount of opening more. · The company doesn’t have threats if any company take a step to enter because ANZ group has a good reputation and large customer base (ANZ Group, 2018). · The company has threats from the cryptocurrency emergence in the market because this digital currency has attracted the people and businessmen including well-known companies. |
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Threat of substitutes |
· The threat of substitute in high in Australia for the group because of the legalization of the digital currency in Australia. · ANZ group also found the threat from the institutions who offer some sort of service to customers. |
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Bargaining power of suppliers |
· ANZ bank suppliers are reserve bank of Australia and New Zealand who offer the support and work as the backbone and this is the competitive advantage of the company considering the diamond model. · There is less bargaining power of suppliers because the RBA is regulated by the government (ANZ Group, 2018). · Apart from reserve bank, the suppliers of the company include customers and businessmen who deposit their amount or invest their amount. After considering this point, the bargaining power of suppliers is high because most of the businesses and customers have switched to cryptocurrency. |
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Bargaining power of customers |
· The bargaining power of the customers is high for the ANZ group in both the markets as the customers can easily switch to the other banks (AMP bank, Commonwealth Bank of Australia, and many others) who offer the similar services to the customers and businessmen. · Apart from this, there are numerous customers who can easily switch towards the cryptocurrency that are available in the market. In addition, there are many customers who make use of this currency for the criminal activities. |
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Rivalry among the Existing Competitors |
· There is intense rivalry among the existing competitors is available in the market which is faced by the ANZ group in the present market. · Moreover, the rise in the use of the digital currency by traders and citizen also appears as competitors. |
This analysis reflects the strategic dilemma that is faced by the ANZ group because of the emergence of cryptocurrency in the market. The emergence of cryptocurrency appears as the risk factor for the company (Knezevic, 2018). The legalization of this currency is one of the biggest because due to this many people, investors and businessmen are investing and performing the trading activities with the help of digital currency which eliminates the role of banks and the use of the hard currency in the market. The elimination of the role of banks and hard currency is one of the risks (Raymaekers, 2015). Moreover, this will reduce the dependency on banks along with this, the market will include the unnecessary flow of money which is essential to stop otherwise the inflationary condition will arise. In addition, this currency is a risk towards the profitability of the company.
It is suggested to the company generate the awareness among the people about the disadvantages associated with the use of cryptocurrency such as this leads to unnecessary supply of money in nation, the high price fluctuation might lead to loss in investment, the digital currency is generally used by people who are involved in the criminal activities and many other. The government should ensure the use of cryptocurrencies in the market doesn’t lead to the elimination of the hard currency. The reserve bank should contribute to managing the flow of money in the market.
Conclusion
In the end, the report includes the analysis that there are numerous external factors due to which the company needs to bring the changes in their decision making. The major factors which created the impact on the financial operations of the company are an introduction of cryptocurrency. This digital currency has created an impact on the working of the banking industry and ANZ group. The legalization of the currency leads to the risk of elimination of hard currency. Along with the social behavior of people has changed which created the risk for the group.
References
ANZ Group (2018) About ANZ [Online]. Available from: https://shareholder.anz.com/our-company/profile?_ga=2.44436707.690094383.1526027865-973082256.1526027865 [Accessed on 19th May 2018]
ANZ Group (2018) ANZ Shareholder Centre [Online]. Available from: https://shareholder.anz.com/our-company/profile/history?_ga=2.44436707.690094383.1526027865-973082256.1526027865 [Accessed on 19th May 2018]
Bajpai, P. (2018) Countries Where Bitcoin Is Legal & Illegal (DISH, OTSK) [Online]. Available from: https://www.investopedia.com/articles/forex/041515/countries-where-bitcoin-legal-illegal.asp [Accessed on 19th May 2018]
Chuang, C.C. and Hu, F.L. (2015) Technology strategy-innovating for growth of ANZ Bank. International Review of Management and Business Research, 4(3), p.682.
Cocco, L., Pinna, A. and Marchesi, M. (2017) Banking on Blockchain: Costs Savings Thanks to the Blockchain Technology. Future Internet, 9(3), p.25.
Dermine, J. (2017) Digital disruption and bank lending. European Economy, (2), pp.63-76.
Dobbs, M. (2014) Guidelines for applying Porter’s five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), pp.32-45.
Fanning, K. and Centers, D.P. (2016) Blockchain and its coming impact on financial services. Journal of Corporate Accounting & Finance, 27(5), pp.53-57.
Knezevic, D. (2018) Montenegrin Journal of Economics. Montenegrin Journal of Economics, p.109.
Kraaijenbrink, J., Spender, J.C. and Groen, A.J. (2010) The resource-based view: a review and assessment of its critiques. Journal of management, 36(1), pp.349-372.
Nowi?ski, W. and Kozma, M. (2017) How Can Blockchain Technology Disrupt the Existing Business Models?. Entrepreneurial Business and Economics Review, 5(3), pp.173-188.
Pavlovski, C. (2015) Reference Architecture for Cryptocurrency in Banking. Information Technology In Industry, 3(3), pp.74-80.
Raymaekers, W. (2015) Cryptocurrency Bitcoin: Disruption, challenges and opportunities. Journal of Payments Strategy & Systems, 9(1), pp.30-46.
Reuters (2018) ANZ to exit Cambodian venture with stake sale to Japan’s J Trust [Online]. Available from: https://in.reuters.com/article/us-anz-divestiture-cambodia/anz-to-exit-cambodian-venture-with-stake-sale-to-japans-j-trust-idINKCN1II175 [Accessed on 19th May 2018]
Riasi, A. (2015) Competitive advantages of shadow banking industry: An analysis using Porter diamond model. Business Management and Strategy, 6(2), pp.15-27.
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