Nowadays, it is very important for the organizations to manage its all internal and external components so that it can stay competitive in the perspective industry. Primarily, they need to emphasize on effective management of its internal components like organizational structure, organizational culture and other related practices. The major objective of this report is to conduct an extensive research on ASB bank in New Zealand on its organizational structure, culture and its leadership and management planning functions. ASB bank is one of the most popular banks in New Zealand that was established in the year 1847 as Auckland Savings Bank. This bank is owned by Commonwealth Bank of Australia. It offers a variety of financial services including rural banking, business retail, fund management, investment, securities and insurance services. It also runs BankDirect that is a branchless services of banking which provides services through internet, phone, ATMs and EFTPOS only (ASB Bank Limited, 2018). ASB has a history of more than 150 years of service to New Zealand’s population and it is among the leading banks of the country. The below report includes the discussion about the external environment of ASB, its organizational structure and culture, sustainable business practices and ethical decision making process adopted by the chosen organization.
The external environment of ASB Bank can be evaluated by using below-given 12 factors of its both general and specific environments:
Political/Legal
In New Zealand, Reserve Bank of New Zealand supervises its banking system. It is the body that develops and implements monetary policies, manages issuance of currency, regulates the banks etc. These factors have positive impact on the business operations of ASB Bank as the liberalization of New Zealand’s government has finished most of the restrictions on ownership and activities of banks (Alvesson, 2016).. This bank operates on “at your own risk” policy for both the depositor and management. It indicates that this bank is free from the interference of government rules and regulations.
Global
In today’s business environment, banks have become global increasingly so global environment may have a huge effect on its profitability and operations.ASB Bank is owned by an Australian Bank i.e. Commonwealth Bank. For its globalized business, the company has hired a team of international business experts who offer specialized services such as foreign exchange management, trade finance and bank guarantees. There are some factors of globalization which have adverse impact on growth of ASB like disruption in market, corporate lending and bad debt expenses.
Socio-cultural
ASB is playing an important role in assisting the communities by providing its financial services and literacy programs. For youth and adults, the bank is providing a great access to the educational facilities primarily in financial literacy. These actions of company have positive impact that they are continuously strengthening their bonding with the society.
Economic
In the year 2017, banks have made a contribution of $7.2 billion to the economy of New Zealand. Country’s economic growth has a significant impact on profit and revenue generation potential of ASB Bank. Economic environment for ASB is moderate as increase in the fuel prices is adding pressures on household incomes. It may have adverse impact on the fund generation of ASB bank (ASB Bank Limited, 2018). However, economic environment of country makes ASB efficient and well-capitalized because its banking system has sufficient buffers of liquid assets, capital and stable funds.
Technological
Technology is one of the most important factors that have positive impact on organizational growth. By using advanced technologies, ASB Bank has started its operations using internet, phone, ATMs and EFTPOS. It helps the organization to increase its brand presence and increase its customer base through online services (Alvesson, 2016).
Customers
ASB bank is one of the largest banks of New Zealand that currently has over 1.3 million rural, business and personal banking customers. Customers are very important for the organization’s business as ASB needs to make changes in their financial and banking services considering their needs and expectations. For example, it has introduced its branchless services looking at people’s interest towards digital services (ASB Bank Limited, 2018).
Suppliers
ASB has various suppliers who support it in conducting its operations in New Zealand’s banking industry. One of the major suppliers of this bank is IT companies which provide its software and technologies to practice banking activities and accounts. Moreover, other suppliers arethe stores which supply the stationary and other required resources to process banking services.
Competitors
The major competitors of ASB are Kiwi Bank, Westpac, NAB and ANZ Bank Limited. They pose intense competition on ASB’s operations as they have to make changes in their processes and strategies considering their competing brands. It assists them in retaining their customers for a long time (Wilson, Zeithaml, Bitner, & Gremler, 2012).
Regulators
The banking system in New Zealand is regulated by Reserve Bank of New Zealand. It has given various policies and standards which this bank needs to meet so that it can reduce the bank failures.
Strategic Partners
ASB is owned by Commonwealth Bank of Australia and it has its partners in different countries like India, China, Korea and Indonesia. These strategic partners assistASB in attaining its ambitions and goals.
Interest Groups
Environmental conservation groups are the major interest groups who are working for residential development of New Zealand’s cities. These groups are making pressure on bank that they should engage in environmental and corporate social responsibilities.
Employees
Currently, ASB has around 5000 employees who are working for the benefits of ASB bank. They are very critical to the organizational performance as they are providing financial and banking services to customers on behalf of ASB (ASB Bank Limited, 2018).
Organizational culture is a system of shared values, beliefs and assumptions that regulates how the people behave in an organizational environment. It plays an important role in effective management smooth operations of company (Alvesson, 2016). ASB’s organizational culture is an important factor in continuing growth and success of its banking business. The corporate culture of ASB bank is developed by incorporating different values such as integrity, passion, innovation, ambition, care, respect and support. The organization is engaged in hiring an unbeatable team that can provide unbeatable experience to its customers. In New Zealand, ASB Bank is very popular for its great team culture. Whether the employees are working in national sales, branch network or head office, they feel its identifiable and strong culture where the emphasis is to get success.
ASB has shown its culture through its business processes and workplace environment. It can be seen that by developing a team culture, the firm involves its employees in its decision making process. At ASB, the voices and opinions matter a lot so they provide different ways to take their feedback for example; annual People and Cultural survey. By doing this, it provides a highly engaged and world class workplace to its employees (Alvesson & Sveningsson, 2015).
Employees can learn organizational culture in different ways. Training is one of the best ways to transmit culture into employees. The organization can conduct training program and trainer who can effective pass the culture to new employees. Examples are the other ways which can help top managers to make the employees learn about their cultural values and beliefs. Moreover, employees can learn the culture through the guidance of senior managers (ASB Bank Limited, 2018).
ASB’s organizational culture has a great positive impact on its performance. The employees of the bank are very much engaged in its business practices that led the organization towards its business goals. It continuously strives to innovate its operations with advanced technologies as it believes that having best systems and technologies to work is vital for employees so that they can attain their best. For instance, its branch banking system is one of the best systems across the world. The values and vision has emphasized on outshining in customer service in addition to measuring employee engagement. It measures customer engagement via response from around 28,000 clients every year and assists us to make sure that each interaction with the customers creates a positive relationship (Watson, 2016). It helps the organization to retain its customers and generate significant revenues in world banking industry. Thus, organizational culture of ASB has positive effect on its performance.
Organizational structure of a company is a system that is used to describe a hierarchy within an organization. It recognizes every job, function and to which it report in organization (Ashkenas, Ulrich, Jick & Kerr, 2015).
By researching bank’s websites, it can be stated that ASB Bank has mechanistic organizational structure that is very much like a bureaucracy and it has high formalization, departmentalization, a restricted data network etc. The organizational structure of this bank depicts that it has this type of structure with fixed duties, strong hierarchical relationships, higher formalization, and centralized decision making process and formalized channels of communication. In contrast to this, it does not use organic structure as it is very much boundary less with changeable duties, informal communication and collaboration.
In New Zealand, ASB Bank adopts the centralized organization structure where the senior manager’s power is stronger. At ASB, centralized structure is used that is a setup where the power and decision making responsibilities are given few of its leaders. In this, ASB Bank has hired its own primary decision making executives in its central headquarters with offices. It has meeting areas for its executives to discuss about the operations and activities.
Hierarchical organizational structure is a systematic structure in which the power flows upward and vertically and all the workers are departmentalized. In this structure, all of the employees need to follow a chain of command. ASB has strong hierarchical relationships and it has managed all the departments as per their levels like top, middle and lower level. Also, ASB’s structure is divisional with instituting different branches with managers who manage and control its operations. Its different divisions promote team culture and every department has a delegated HR function. At ASB, there are different departments like risk management, technology and operations, communications, corporate banking etc. This structure plays a coordinating role at business unit and corporate levels.
The term Span of control indicates the number of employees who are responsible to report to one supervisor in the hierarchy. The organizational structure of ASB Bank shows that this bank has a narrow span of control where the top manager controls very few employees in every branch of ASB. It allows the bank to gain different advantages like it enables its managers to interact quickly with their subordinates (Taherparvar, Esmaeilpour & Dostar, 2014). They can control them very easily. Secondly, they can take effective feedback of employees and can work on them. Thus, the span of control of ASB is impactful that can assist it to manage the functions of managers.
Apart from above organizational structures, ASB Bank can use two other organizational structures in its banking operations. These structures are stated below:
ASB could adopt matrix organizational structure. It is the type of structure in which the reporting relationships are managed as a matrix or grid, not as a traditional hierarchy. If this organization will adopt this structure, it will be able to foster environmental change and adaptability on global level. Currently, the company has a limited information network that is the major reason behind implementation of this structure. Under this structure, the employees will be in contact with several people that will assist in sharing the data. It will speed up the ASB’s decision making process. The major benefit of this organizational structure will be that it will maximize the effectiveness of bank’s services and operations (Lemon & Verhoef, 2016).
Another structure is functional organizational structure that could be used by ASB Bank. By using this structure, the organization can departmentalize its workplace on the basis of common functions of job. In these departments, the middle and lower level employees can besupervised by the top managers in the same field. For example, this bank has different functional department managers General Manager marketing, General Manager banking services, General Manager Finance and accounting, General Manager Human Resource, quality managers, service managers and investment. The major reason behind using this structure is that it lacks effective management of its all the departments and other activities. The major benefit of this is that all the employees of bank will be grouped by their skills and knowledge that will assist it in attaining higher level of performance (Cohn, Fehr, & Maréchal, 2014).
As mentioned above, ASB Bank has mechanistic type of organization structure in its workplace environment that has various effects on its management practices. Mechanistic organizational structure is the structure that is bureaucratic and hierarchical in nature. The roles, structure and processes are reflected as a machine in which every part performs the task what it is purposed to do. It has a well-defined, clear, authority, control, centralized and vertical hierarchy of command (Lee, Kozlenkova & Palmatier, 2015). It would have positive impact on management practices of ASB as it will increase its operational efficiency while reducing the costs via centralized decision making process. The major feature of this structure is formalization that would assist ASB in enhancing its performance in banking industry. This type of structure is very strict that will support ASB bank in managing its management practices effectively.
Changes in Span of Control
Span of control can be defined as a number of subordinates which a supervisor or manager can control directly. At ASB Bank, if there will be changes in the span of control than it will have a huge impact on management. It will affect the organization’s time to take the decisions and its cost structure (Hogan & Coote, 2014). If there will be higher span of control then there will fewer levels of management. It will lead the bank to make faster decisions due to fewer levels. It will help the ASB Bank to respond very fast to the issues faced by this organization. In this situation, the workers have very few levels for approvals. There will be better communication among the managers and workers on other levels. In this way, the changes in span of control can impact the managers and workers of ASB Bank.
Advantages of centralised and decentralised structure
Centralised Structure
Decentralised Structure
ASB Bank is engaged in various sustainable business practices which helped the organization to establish a brand image in New Zealand and other countries. The organization is committed in managing its effect on environment effectively and responsibly while assisting to build a sustainable future for the population of New Zealand (ASB Bank Limited, 2018). It has taken various initiatives for environmental sustainability like:
It indicates that sustainability is the central to the business practices of ASB Bank. At ASB, leaders and other stakeholders can take different actions to attain sustainability like they can motivate their community people to protect the environment. Moreover, they can use online tools and technologies so that they can reduce the use of paper (Bouma,, Jeucken & Klinkers, 2017).
Payment of government officials is considered as an ethical issue because it can lead the organization to give bribe to those officials. There are various firms which are engaged in these ethical issues like bribery (Ferrell & Fraedrich, 2015). Bribery is where large sums are offered to government officials to secure a contract. There may be involvement of both local and foreign government officials. In this situation, the payment is done to officials with a corrupt objective to induce him/her to misuse his/her authority (Cavico & Mujtaba, 2010). As a banking corporation, if ASB Bank is committed in any legal and moral issues like distortion of tender process and materials used favouritism of suppliers then it will have bad impact on the brand image of bank in New Zealand and other countries. By using favouritism of suppliers, this bank can give preference or advantage to the suppliers who are their friends and part of their family. It can have huge impact on the cost structure of the bank as they need to purchase the materials on the prices offered by the suppliers (Lock & Seele, 2015). The organization will not be aware about the changes in the market and the prices of suppliers.
One of the biggest ethical issue in which ASB was engaged in that high court of New Zealand found that Commonwealth Bank of Australia is using ASB as a Laundromat via that it has washed its illegal transactions every year so that they can avoid the NZ taxes (The conversation, 2017). It fed into the group profits of CBA directly. Due to this, ASB was fined with a huge amount of penalty. As per utilitarian view point, this bank should engage in the right things and it should avoid the bad practices which may have impact on its internal and external stakeholders. Behaviour of employees and managers will contribute to the greatest good of most of the people and interests of entire society (Chiu, Wang, Fang & Huang, 2014). According to individualism viewpoint, ASB has the right to act as an autonomous agent of CBA. In this way, the organization can handle different issues by using viewpoints of ethical behaviour.
Conclusion
From the above analysis, it can be concluded that ASB Bank in New Zealand is using effective organizational culture and structure which support the organization in managing its operations effectively. The organization should make some suggested changes in its organizational structure and processes. By using ethical viewpoints, the company should try to avoid coming into any unethical practices.
References
Alvesson, M. & Sveningsson, S., (2015). Changing organizational culture: Cultural change work in progress. UK: Routledge.
Alvesson, M. (Ed.). (2016). Organizational culture. Sage.
ASB Bank Limited. (2018). About Us. Retrieved from https://www.asb.co.nz/about-us?fm=header:menu:about_us#
ASB Bank Limited. (2018). ASB targets 20% reduction in greenhouse gas emissions. Retrieved from https://reports.asb.co.nz/report/article/3717/0/0/asb-targets-20percnt
ASB Bank Limited. (2018). Corporate Responsibility Report. Retrieved from https://www.asb.co.nz/documents/corporate-responsibility/corporate-responsibility-report-2017.html
Ashkenas, R., Ulrich, D., Jick, T., & Kerr, S. (2015). The boundaryless organization: Breaking the chains of organizational structure. John Wiley & Sons.
Bouma, J. J., Jeucken, M., & Klinkers, L. (Eds.). (2017). Sustainable banking: The greening of finance. Routledge.
Cavico, F.J. & Mujtaba, B.G. (2010). Baksheesh or Bribe: Payments to Government Officials and the Foreign Corrupt Practices Act. Journal of Business Studies Quarterly, 2 (1), 83-105.
Chiu, C. M., Wang, E. T., Fang, Y. H., & Huang, H. Y. (2014). Understanding customers’ repeat purchase intentions in B2C e?commerce: the roles of utilitarian value, hedonic value and perceived risk. Information Systems Journal, 24(1), 85-114.
Cohn, A., Fehr, E., & Maréchal, M. A. (2014). Business culture and dishonesty in the banking industry. Nature, 516(7529), 86
Ferrell, O. C., & Fraedrich, J. (2015). Business ethics: Ethical decision making & cases. Nelson Education.
Harper, C. (2015). Organizations: Structures, processes and outcomes. Routledge.
Hogan, S.J. & Coote, L.V., (2014). Organizational culture, innovation, and performance: A test of Schein’s model. Journal of Business Research, 67(8), pp.1609-1621.
Lee, J. Y., Kozlenkova, I. V., & Palmatier, R. W. (2015). Structural marketing: Using organizational structure to achieve marketing objectives. Journal of the Academy of Marketing Science, 43(1), 73-99.
Lemon, K.N. & Verhoef, P.C., (2016). Understanding customer experience throughout the customer journey. Journal of Marketing, 80(6), 69-96.
Lock, I., & Seele, P. (2015). Analyzing sector?specific CSR reporting: Social and environmental disclosure to investors in the chemicals and banking and insurance industry. Corporate Social Responsibility and Environmental Management, 22(2), 113-128.
Shapiro, J. P., & Stefkovich, J. A. (2016). Ethical leadership and decision making in education: Applying theoretical perspectives to complex dilemmas. Routledge.
Taherparvar, N., Esmaeilpour, R., & Dostar, M. (2014). Customer knowledge management, innovation capability and business performance: a case study of the banking industry. Journal of knowledge management, 18(3), 591-610.
The conversation. (2017). Where the accountability problems started at CBA. Retrieved from https://theconversation.com/where-the-accountability-problems-started-at-cba-83809
Watson, A. (2016). Disruption or distraction? How digitisation is changing New Zealand banks and core banking systems. The Reserve Bank of New Zealand Bulletin, 79(8), 3.
Wilson, A., Zeithaml, V.A., Bitner, M.J. & Gremler, D.D., (2012). Services marketing: Integrating customer focus across the firm (No. 2nd Eu). McGraw Hill.
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