Environmental Analysis Of National Australian Bank

Political Environment

Discuss about the Business Management for Technological, Legal and Environmental.

This is a study which will conduct an environmental analysis on the company named National Australian Bank. National Australian Bank is one of the major players in the Australian market. In terms of earnings, market capitalization and consumers it has been considered a major financial institution. The market capitalization shows that the organization is among the top 30 global banks where market capitalization was the basis of evaluation.  Similarly, when the organization measured by the total assets is among the top 50 global banks (Nab.com.au, 2018). The organization has been serving all types of consumers and has been with large, medium and small scale businesses all over the world. Moreover, the organization provides support to organizations at every stage of their business life cycle. There is intense competition among the major competitor in the market and the competition increases with the advent of new players in the market. The advent of technology has changed the business environment and new revelations in technology will change the business model of the major market players.  Digital trends will have deep impact on the financial institutions as they will be able to provide a better service to the consumers and reduce the time taken to address the problems faced by the customers. 

Pestle analysis is a tool used to analyze the macro environment of a company. This will identify the factors that will have a direct impact on the National Australian Bank and the issues faced by the bank due to the change in the external environment. The various factors in PESTLE analysis are political, economic, social, technological, legal and environmental. 

The political environment will have a significant impact on the profitability of the organization.  National Australian Bank operates in different political environment due to their presence in the global market. Therefore, the organization has to face different type of political system and environment risk. Therefore, political stability, corruption and bureaucracy are important factors affecting National Australian Bank.  Nab had developed a policy where they have stopped providing donations to the different Australian political parties (Bailey & Inderberg, 2017). This will facilitate the organization in shunning the perception of the public graft.   The phenomenon of donating sums of money to the political entities has always been misinterpreted. This decision taken by the organization may be instrumental for the industry as this will change the practice of making corporate donation to the different political parties. BREXIT has affected the global market and NAB has also been affected by the BREXIT (Gray, Harymawan & Nowland, 2016). The subsidiaries of the company in Scotland namely Yorkshire Bank and Clydesdale have been underperforming.  This is one of the major concerns for the bank as majority of the investments are from Australian investors.

Economic Environment

The GDP has been subdued due to the decrease in the commodity prices all over New Zealand and Australia.   The prices of the commodities in the market have hit their all time low which means that there has been significant decrease in income generation.   This is the basic reason of lack of growth in the industry and will affect the banking sector at the same time (Hatfield-Dodds et al., 2015). The unemployment is cyclical and rate of inflation is low which has heavily pressurized the economy. The demands of the Australian commodities are expected to decrease significantly which will further lower the prices in the commodity sector. The financial sector will be deeply impacted by these changes. There are fluctuations in the global economy and the growth had been lowest in the year of 2016. There has been moderate increase in the growth rate from the year of 2017.  NAB has been affected in global market due to their presence in different countries. The Fragmentation of the European Union has reduced the growth of the economy to 2%. The organization has been similarly affected in Asia and China but subdued growth is expected from these markets. 

The organization has been involved in community programs that highlight the social cohesion and financial exclusion.   In order to develop strong relationship with the stakeholders NAB has been actively involved in activities by taking up social projects which will help the local communities. National Australian Bank has formed a partnership with the Centre of Social impact; they have participated in projects that will improve the inclusion of Australians and Financial Health (Shanahan et al., 2014). Moreover, they have developed a framework of Financial Resilience and have provided microfinance solutions by collaborating with Good Shepherd Microfinance to many indigenous Australia in the last 10 years. The organization has also focused on establishing gender equality within the organization by aiming to increase significant representation of female in executive and leadership roles.  The organization has been able to maintain an astounding 38% representation of female in executive roles in NAB, 39% representation of females on Group subsidiary boards and 30% representation of females in the board roles in National Australian Bank. The organization has also been working on reducing the gender pay gap and the gap at NAB is less than the average in the Australian Financial sector.

Technological development in different sectors in the industry is rapid and the National Australian bank has been instrumental in providing the consumers with top quality service by using innovation. The organization has developed personal banking originator platform (PBOP) to provide the consumers with better service. The bank has provided 24 hours services to the consumers and telephone banking.  National Australian bank has also investments in development of Data republic and programs like MLC on track in order to take preparations for the data revolution.  On the contrary, due to the immense growth in the technology, the organization will be affected by the other competitors in the market that are using technological innovation (Shahiduzzaman & Alam, 2014). Technology has deeply impacted the product offerings of the companies in the industry so in order to maintain competitive advantage NAB will have to constantly use innovation. Similarly, these have affected the cost structure of the banks as there has been increase in spending in the field of innovation. The incorporation of innovation and technological change within the organizational business model will have an impact on the value chain and there has been considerable change in organizational value chain in order to make improvements in the operational efficiency (Baker, Merkert & Kamruzzaman, 2015). These have increased the technological diffusion in the financial sector where the companies in the financial sector are using challenging technologies to provide better consumers satisfaction and develop a better business model. 

Social Environment

The legal framework in the banking sector will provide guidelines which should be followed.  The organization may face imposition of penalties and fines by the regulators in the banking sector which will have an effect on the brand image and the profitability of the organization. The internal audit of NAB states that they have shortcomings in their risk management process. This may lead to litigation when there is an event of fraud (Rubin, Aas & Stead, 2015). The organization has started programs such as OAR (open advice review) which focuses on the documentation of negotiations with parties that are independent.  This system faces challenges such as timing and scope of financial assets, financial services for consumers and estimation and scope of consumers associated with National Australian Bank. Moreover, the different laws such as discrimination laws, consumer protection and e commerce, health and safety law, employment law, antitrust law and data protection act will impact the operations of the organization if there are changes to these regulations.

The organization operates in different markets and each of the markets has their own regulation regarding environment protection.  The organization is deeply affected by the water and air pollution standards within the sector, waste management, corporate social responsibilities and development of ecological products.  The organization has been able to achieve carbon neutrality and taken initiatives to reduce the emission of green house gases (Muhammad et al., 2015). Even though, the organization has taken considerable initiative in protecting the corresponding environment, the changes in the environmental laws will result changes in organizational policies and procedures.  However, the organization has been instrumental n developing sustainability practices and they will have keep on make improvements in these practices to sustain.

Conclusion

Thus, the conclusion that can be drawn from the report is that National Australian Bank has been facing issues in political, economic and technological environment.  There is political instability in some of the operating environments so the company is at constant risk as it directly affects the financial sector. Similarly, the economy of the financial sector is not growing due to the decrease in price and demand of the commodities.  The technological sector will also be causing issues as technology has dispersed in the financial sector so constant innovation is a challenge the organization faces. The other factors will also have a deep impact if there are changes in the market. Therefore, the changes in the external environment are common for the overall industry and will affect all the organization. National Australian Bank will not be able to mitigate the issues but they have to take measures which will reduce the impact of the change in the macro environment. Therefore, the organization will have to develop strategies which can be used to minimize the negative impact of the change in the market. 

References

Bailey, I., & Inderberg, T. H. J. (2017). Australia: domestic politics, diffusion and emissions trading design as a technical and political project. In The Evolution of Carbon Markets (pp. 136-156). Routledge.

Baker, D., Merkert, R., & Kamruzzaman, M. (2015). Regional aviation and economic growth: cointegration and causality analysis in Australia. Journal of Transport Geography, 43, 140-150.

Gray, S., Harymawan, I., & Nowland, J. (2016). Political and government connections on corporate boards in Australia: Good for business?. Australian Journal of Management, 41(1), 3-26.

Hatfield-Dodds, S., Schandl, H., Adams, P. D., Baynes, T. M., Brinsmead, T. S., Bryan, B. A., … & McCallum, R. (2015). Australia is ‘free to choose’economic growth and falling environmental pressures. Nature, 527(7576), 49.

Muhammad, N., Scrimgeour, F., Reddy, K., & Abidin, S. (2015). The relationship between environmental performance and financial performance in periods of growth and contraction: evidence from Australian publicly listed companies. Journal of Cleaner Production, 102, 324-332.

Nab.com.au. (2018). Personal. Nab.com.au. Retrieved 3 April 2018, from https://www.nab.com.au/

Rubin, T. H., Aas, T. H., & Stead, A. (2015). Knowledge flow in technological business incubators: Evidence from Australia and Israel. Technovation, 41, 11-24.

Shahiduzzaman, M., & Alam, K. (2014). Information technology and its changing roles to economic growth and productivity in Australia. Telecommunications Policy, 38(2), 125-135.

Shanahan, D. F., Lin, B. B., Gaston, K. J., Bush, R., & Fuller, R. A. (2014). Socio-economic inequalities in access to nature on public and private lands: a case study from Brisbane, Australia. Landscape and Urban Planning, 130, 14-23.