Discuss about the Experimental Study of Cryptocurrency Market.
With the introduction of crypto currencies there has been a change in the banking industry. Today the banks are not only used for loans and deposits. There are various instruments of banking that modern banks utilize. These are the instruments like credit cards, cryptocurrencies etc. The objective of this paper is to do the strategic analysis of ANZ group. The organization realizes that cryptocurrencies like Bitcoin and Ripple are the next big things. However, there are various issues involved with the use of cryptocurrencies (Blankenship, 2017). ANZ bank realizes that one of the biggest issues with the use of cryptocurrencies is lack of regulation. It is believed that Satoshi Nakamoto is the founder of bitcoin. However, this is a virtual figure. Moreover, ANZ group cannot regulate the cryptocurrencies market at its own end (Blankenship, 2017). A brief organizational background about ANZ group can be discussed as:
The Australia and New Zealand Banking Group Limited, commonly called ANZ, is the third largest bank by market capitalisation in Australia, after the Commonwealth Bank and Westpac Banking Corporation. The group is a pretty old group in the country as it was established in the year 1853. In the last 150 years, ANZ group has expanded in different parts of the world. In fact, ANZ group has also expanded outside Australia and New Zealand and today the company has presence in 35 countries. The group has a revenue of AUD 21 billion with a net income of AUD 7.4 billion (Krafft, Della Penna & Pentland, 2018). ANZ group provides employment to more than 50,000 people. It is expected that the company would continue to do good in the market.
ANZ operates in a healthy strategic environment in the country. There are number of factors that influence the strategic decision of organization. The key factors that influence the strategic decision making of ANZ group are political, social, technological, etc. PESTEL analysis is a powerful tool to do the analysis of the key factors that affects the strategic decision of any organization (Motsi-Omoijiade, 2017).
Political & Legal factors: The political factors are the key factors that affects the strategic decision making of any organization. The banking industry in Australia is one such industry where financial regulation is high. The government has direct control over the banks in the country and government creates a system of check and balances for banking and financial institutions. The legal and the regulatory framework is strong in the country and any financial institution needs number of approvals and licenses form government (Motsi-Omoijiade, 2017). The government does not support the free trade of crypto currency. Therefore, political factors are not favourable for the trade of crypto currency in the country.
Economic factors: The economic factors are the most important factors for banks and financial institutions. The economy of Australia is growing at a good growth rate and it means a good opportunity for banking and financial institutions in the country. It is expected that the economic industry would remain positive in the country (Krafft, Della Penna & Pentland, 2018). People usually look for the options that can give them good returns and crypto currency is one such platform. However, only the wealthy people would be able to afford in crypto currency. Overall economic risks are high in crypto currency.
Social factors: The social factors are also positive for the banking and financial industry in the country. In the recent times, there has been an increase in the disposable income of consumers and this is a positive sign for banking and financial institutions. In recent times, there has been a social threat of cryptocurrency on banking and financial institutions in the country. The use of cryptocurrency is a big social phenomenon that has a deep impact on industry (Motsi-Omoijiade, 2017). Crypto currency is still not considered as a main stream currency in the industry. Therefore, social factors are not facourable for crypto currency.
Technological factors: The key technological factors that has impacted the banking and financial industry is crypto currencies. It would be correct to say that crypto currencies have completely revolutionized the banking industry in Australia and other parts of the world. Today, people have a different expectation from bank because of the emergence of crypto currencies (Gainsbury & Blaszczynski, 2017). The technological factors are positive for crypto currency as the operations of crypto currency is based on strong technology.
Environmental factors: The environmental factors are almost indifferent for banking and financial industry in the country. At the same time, it is expected that the large banking groups like ANZ would use the sustainable means of operations to support the environment. The environmental factors does not have much of the difference on the operations of crypto currency in Australia.
Porter’s Five Forces Framework is a tool for analysing competition of a business. It draws from industrial organization (IO) economics to derive five forces that determine the competitive intensity and, therefore, the attractiveness (or lack of it) of an industry in terms of its profitability (Drozd, Lazur & Serbin, 2018). The five forces for ANZ group can be discussed as:
The porter five forces analysis is a powerful tool to assess the competition for any firm (Zulhuda & Binti Sayuti, 2017). These five forces for the strategic position of ANZ group can be discussed as:
Industry rivalry: The industry rivalry is high in the banking industry in Australia. There are number of players in the market and they have very little to offer in terms of product differentiation (Krafft, Della Penna & Pentland, 2018). Today, consumers have various options to choose form and generally the consumer would choose the bank that provides better service. It is expected that the industry rivalry would further increase with time. For crypto currency, consumers can trade with any supplier. Therefore, the industry rivalry is high.
Bargaining power of suppliers: The key suppliers to banking and financial industry players are government and financial institutions. The bargaining power of suppliers is moderate in the industry. The government has direct control over the banks in the country and government creates a system of check and balances for banking and financial institutions. With this government exercise some power over the banks and financial institutions in the country (Gainsbury & Blaszczynski, 2017). However, with crypto currency, suppliers are not known and suppliers of crypto currency cans have high power (Park, 2017).
Bargaining power of buyers: The bargaining power of buyers is high in the industry. The competition is high, and consumers have number of options. With the use of Internet banking and mobile banking the bargaining power of buyers has further increased as customers do not have to go to bank to buy crypto currency (Kbilashvili, 2018).
Threat of new entrants: The threat of new entrants is low in the industry as it is not easy to start a bank or financial institution (Thelwall, 2017). However, various mergers and joint ventures can happen. Still, it is expected that the threat of new entrants would remain low for this industry (Drozd, Lazur & Serbin, 2018).
Threat of substitute: The threat of substitute is average or relatively low in this industry. There is no easy substitute for banks and financial institutions. However, there are various small and private players that are considered as substitute (Kbilashvili, 2018).
ANZ group is doing good in the market. One of the tools to do the strategic analysis of any organization is IO model. The I/O or Industrial Company model adopts an external perspective (Krafft, Della Penna & Pentland, 2018). It starts with an assumption that forces external to the company represent the dominant influences on a company’s strategic actions. The IO model for ANZ group can be discussed as:
This model suggests that the first thing that organization should do is analysis of external environment. With this model, ANZ group should do four key things before doing strategy implementation (Bacina & Kassra, 2017). The flow of IO model for ANZ group can be highlighted as:
Step 1: Study external environment – It means that ANZ group should assess the key political and non-political factors in Australia that affects the use of cryptocurrency. For example, what is the stand of Australian government for the use of cryptocurrencies in the country?
Step 2: Analyse the attractiveness of industry – It means to perform the cost benefit analysis and then take the decision towards the use of any financial instrument like crypto currencies (Jackson, 2018). For example, is the use of cryptocurrencies beneficial for ANZ group in long term or this is just a short-term instrument?
Step 3: Strategy formulation for ANZ group – It means to devise the business level strategy of ANZ group like product differentiation or cost leadership. Currently, ANZ group follows the service differentiation strategy (Hughes & Middlebrook, 2015).
Step 4: Get required assets and skills – It means to recruit the right set of people
Step 5: Strategy implementation – It means to take various stakeholders together and implement the strategy (Krafft, Della Penna & Pentland, 2018).
The strategic analysis of ANZ group reveals that the external factors like rise of cryptocurrency can greatly impact the operations of company. The lack of regulation in the cryptocurrency market is one of the biggest concern for financial players in the market. The key thing for ANZ group is to develop the strategy for the use of cryptocurrency (Thelwall, 2017). The key recommendations for ANZ group can be discussed as:
The ANZ group has done well in the recent past; however, there is a scope of improvement (Thelwall, 2017). The key recommendation areas for ANZ group can be discussed as:
Due to high competition in the market, organizations must treat customers as king. The focus on MVP is the process that benefits to establish the customers’ feedback through minimum effort. It is also useful to test the essential business hypothesis without perfecting the products or services too early. In this context, Adapa & Roy (2017) suggested that in next step of innovation accounting MVP allows a business to get the decision on the basis of innovation ideas. After completing the second stage, the process evaluates the progress business according to the decision and makes changes in innovation process as per the outcome (Chohan, 2017).
It is important that ANZ group should take the people into confidence about its stand on crypto currencies. Therefore, it is recommended that ANZ group should have a strong policies and guidelines towards the use of crypto currencies and the same should be highlighted to consumers (Bacina & Kassra, 2017).
Conclusion
The above paper discusses the strategic analysis for ANZ group. It would be correct to say that the use of cryptocurrency is a big social phenomenon that deeply affects the players in banking and financial industry in the country. The industry attractiveness is high as the threat to entry is high. However, the competition is high in the industry. It is recommended that ANZ group should have a strong policy in place about the use of cryptocurrency. It would strengthen the position of group in the industry.
References
Adapa, S., & Roy, S. K. (2017). Consumers’ post-adoption behaviour towards Internet banking: empirical evidence from Australia. Behaviour & Information Technology, 36(9), 970-983.
Bacina, M., & Kassra, S. (2017). Technology: Unlocking cryptocurrency token sales. LSJ: Law Society of NSW Journal, (37), 79.
Blankenship, J. R. (2017). Forging Blockchains: Spatial Production and Political Economy of Decentralized Cryptocurrency Code/Spaces (Doctoral dissertation, University of South Florida).
Chohan, U. W. (2017). Assessing the Differences in Bitcoin & Other Cryptocurrency Legality Across National Jurisdictions.
Drozd, O., Lazur, Y., & Serbin, R. (2018). Theoretical and legal perspective on certain types of legal liability in cryptocurrency relations. Baltic Journal of Economic Studies, 3(5), 221-228.
Gainsbury, S. M., & Blaszczynski, A. (2017). How blockchain and cryptocurrency technology could revolutionize online gambling. Gaming Law Review, 21(7), 482-492.
Hughes, S. J., & Middlebrook, S. T. (2015). Advancing a Framework for Regulating Cryptocurrency Payments Intermediaries. Yale J. on Reg., 32, 495.
Jackson, O. (2018). US or Swiss approach for EU crypto regulation?. International Financial Law Review.
Kbilashvili, D. (2018). Influence of E-Commerce and Cryptocurrency on Purchasing Behavior of Wine Customers. Global Journal of Management And Business Research.
Krafft, P. M., Della Penna, N., & Pentland, A. (2018). An Experimental Study of Cryptocurrency Market Dynamics. arXiv preprint arXiv:1801.05831.
Motsi-Omoijiade, I. D. (2017). Financial Intermediation in Cryptocurrency Markets–Regulation, Gaps and Bridges. In Handbook of Blockchain, Digital Finance, and Inclusion, Volume 1 (pp. 207-223).
Park, H. A. (2017). The Essential Principles for an Active Securities Regulation of Cryptocurrency.
Thelwall, M. (2017). Can social news websites pay for content and curation? The SteemIt cryptocurrency model. Journal of Information Science, 0165551517748290.
Zulhuda, S., & Binti Sayuti, A. (2017). Whither Policing Cryptocurrency in Malaysia?. IIUM Law Journal, 25(2), 179-196.
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