This paper will show the situational analysis of commonwealth bank, it also analysed the organisational structure and its strategies. Because every business needs to take some action that will help them keep a good position in the market, but before taken any action they have to do some research the find to cause of problem in order to identify the resolution. The results and useful information during this analysis will help the organisation to choose suitable strategies, develop that management strategies and improving the service operation, which is going to help them achieve their objectives.
At the beginning it will be presented brief history of commonwealth bank and following by their operational service, problems and challenges, current situation in the business, strategies analysis and management structures and organisation structures. Almost the end of this paper it has provided the recommendation based on how commonwealth bank could done better or improved their business such as what they should keep doing and what they have to change or adjust. However, if you still want to double-check your understanding you can read more in the conclusion part, which provides at the end of this report.
History Commonwealth Bank of Australia (CBA) is Australia’s largest retail bank and one of the ‘ Big Four’ bank. It was established in the early 19th century as a private corporation and a partnership. It also operates in New Zealand and Asia country such as Japan, Singapore, Hong Kong and Malaysia. The Commonwealth Bank of Australia (CBA) supports sector with their following industries such as banking, financial and investment service. The purpose is to promote the settlement and development of the local areas and savings. Its core business is to provide retail and institutional banking business.
There is also a fund manager and a major share of the market in general and life insurance (About us, 2008). Labor government, Andrew Fisher, decided to establish a state bank for the newly formed nation. The State Bank was established in the 19th century as the Commonwealth Bank, most recently, the State Bank of Victoria (1990) and the merger colony in 2000, his successor bank in the country to save the Bank of NSW. It provides a wide range of financial services including retail, business and institutional banking, funds management, superannuation, insurance, investment and brokerage services (Commonwealth bank, 2008).
Operational Commonwealth Bank is the largest financial services distribution network in the country with the most points of access to customers. More than 51, 000 people in Australia are working for Commonwealth Bank, most of them are women and they also provide a range of flexible work options for supporting their employees such as career breaks, carer’s leave, study leave and parental leave. It has over 1, 100 branches nationally, over 3, 700 Australia Post agencies and over 4, 200 ATMs nationally. Commonwealth Bank supports more than 249, 000 terminals throughout Australia and more than 10 centers that handle more than 120 million calls per year.
They offer personal banking services with more than 3700 Australia Post agency banking transactions and services for business customers in more than 570 agencies nationwide Australia Post. Customers can use their card more than 25 million locations around the world, with over 4. 3 million customers and more than 67 million active NetBank signed a month (About us, 2008). Commonwealth bank’s problem and challenges The main competitors of commonwealth back are Westpac, ANZ and NAP, which they try to complete against each other.
In 2007, commonwealth back has lose their existing customers because the competitor such Westpac has change their product structure by provide more variety of banking services, online banking and the increasing of the ATM boxes. So in 2008, commonwealth has changed their product structure as well by improving their operational system, offering more variety of services, developing their customer service strategy and using advance technology such as Netbank that allows the clients manage their account online, transfer money, pay the bills, etc.
They also have some management problem because in year 2001, the boards of commonwealth have made wrong decision about their business strategy due to the decreasing of their profits in year 2001 – 2002, then they made the adjustment on their strategy and start doing well again. Current situation The current situation of commonwealth bank is stay in a very good position because they have become the leader of retail bank in Australia, which is best in customer service. They also have good reputation because they have donated some money to public, supported sport events and helped environmental saving program.
Their current financial situation; at 30 June 2012 their net profit after tax on statutory basis increased 11 per cent to $7, 090 million and on cash basis, up 4 per cent to $7, 113 million, fully franked final dividend of $1. 97 per share, an increase of 5 per cent on the prior year. The dividend payout ratio (cash basis) was 75%. The Group has $718, 229 million in assets (InvestSMART, 2012). According to the figure above you will see that commonwealth bank has made more profits if compare with last financial year. So, that’s mean they have done the right thing, used suitable strategies and well management within the organisation.
Commonwealth strategies Strategic vision To be the best of the Australian financial services organization with excellent customer service. Strategy Analysis: Commonwealth Bank aims to reward shareholders with superior performance by increasing the growth of income and capital effective cultural production staff. Strategy is to capitalize on the competitive advantage that is hard to replicate. Banking sources indicated that three of the main advantages of the program are to provide industry-leading technology, financial services, customer focus and employee culture, a strong balance sheet.
In order to support the return to shareholders by the CBA more attractive to customers in the bank, multi-channel customer loyalty and increase customer satisfaction and reduce costs, bad debt below peers. The decrease in bad debt loss to CBA more room in pricing our best to win and retain business while remaining profitable enough. Group will continue invest in the competitive advantage. CBA technology projects of industry leading Core Banking $ 1. 1bn modernization project, which is rolling out the banks and the real-time settlement on the same day throughout the deposit and loan customers.
Project is completed efficiently and CBA are big banks only offer these features across the customer base advantage, which will take years to replicate the competition that the project was launched in 2008 for the CBA did. CBA? s policy on acquisitions is to acquire only when it can create more value for shareholders than they can create for themselves (InvestSMART, 2012). Organisational chart Previous Organisation structure (2001-2002) Commonwealth Bank has changed the structure of their organizations to create a vertically integrated structure to meet the development and delivery of services to customers.
There are four business divisions that focussing on a particular customer base on: * Retail banking services, its purpose is to meet the financial needs of personal and small business customers seeking accessible and affordable banking (John Mulcahy). * Financial Services premium will bring together the bank’s wealth management business, which is proprietary to customize products and services for customers with more complexes financial needs (Michael Katz). * Investment services and insurance will bring together the main pension fund, insurance and fund management group.
This will include Colonial First State Asset Management and Insurance, Commonwealth Insurance of the Commonwealth and colonial support for third-party brokers, agents and financial advisers under the existing brand (Peter Polson). * Institutional and business services to meet the needs of cooperation and institute organisation (Michael Ullmer). Current Organisation Structure (2012) There are five new business divisions compared to the previous one: Retail Banking Services (Matt Comyn)
Retail banking services to deliver the service, focusing on the financial needs of personal and small business customers who are looking for something simple, convenient and affordable banking. It also shows the function of marketing and online strategies. Business and Private Banking (Ian Narev) Private business and banking relationship management for small and medium enterprise customers and the customers and offers a wide variety of services and solutions. It also serves customers from online trading, personal and institutional, and provides guidance and opportunities to premium customers through personalized programs of the Commonwealth.
Institutional Banking and Markets (Ian Saines) Institutional Banking and Markets provides equity, debt and banking services, including payment systems, to the Group’s Institutional clients. Its Total Capital Solutions approach delivers industry expertise and specialist skills that meet clients’ needs and span the capital spectrum. Wealth Management (Annabel Spring) Wealth Management brings together the Commonwealth Bank’s funds management manufacturing and distribution capability as well as its domestic insurance and financial advice business support divisions.
These divisions include the well-known brands of Colonial First State Global Asset Management, Colonial First State and Commissure. International Financial Services (Simon Blair) Commonwealth bank is provided the financial service to International Financial Services Asia (IFS Asia) and retailers in Asia and the SME Bank (Indonesia, China, Vietnam and India), investment banking, retail, China and Vietnam, the Chinese capital with life insurance and insurance operations in Indonesia. But it does not include business and private banking and institutional banking and markets, Colonial First State Global Asset Management business in Asia.
Centralisation organisation Commonwealth Bank is an organization that provides centralized their decision making power at the top of hierarchy. Commonwealth bank does not delegate decisions to middle or lower management level. Retailers generally have a centralized structure because it is easy to control and manage their organizations. Decisions about the range of products, services and operations of the stores are all at the top of the hierarchy. Formalisation structure Commonwealth bank also use formalisation to increase their rationality.
In addition, formalisation is attempt to make employees’ behaviour more predictable and easier to control by standardising it. Standard procedure for the production and quality control checklist and will be sent before you send a sample of the product formalization. Formalisation may attempt to make clear the relationship between the visible and the organization. It can make a difference in status among members of the organization in a way that is objective and external to the participants themselves. Commonwealth bank used formalisation structure, which all employers and employees have to follow the rules and policies of the organisation.
The benefit of formalisation structure is it makes the process of succession routine and regular so that people can be replaced when necessary with minimal disturbance to the functioning of the organization. Formalisation is influenced by the tradition of enterprise and technology. Can be classified as one of the technology and not active. Organisations that work on a regular basis tend to be higher than those in the claws of a little technology. Support divisions Financial Services Commonwealth Bank also provides a specialist advice to the customers regarding the organisation’s financial management and strategy.
This advice covers finance, investor relations, security, general procurement, audit, treasury, and property. Risk Management Risk Management team is responsible for developing appropriate strategies and risk frameworks to allow the company to take conscious thinking about market, operational, compliance and insurance risks within the business areas. The company do it by identifying, analysing, assessing and reporting risks; assessing the impact of change in laws, regulations and industry codes to achieve the optimal risk and return the best outcome for the organisation. Enterprise Services
Services organization providing technology and service operations throughout the Commonwealth Bank Technology Banking team provides a platform for innovative products, as well as the tools necessary for our business operations to drive the use of technology in the process. it will help to provide the service more effective, efficient and in timely manner, which is an important component of customer value. The main innovation of the modern banking system that is customer-centric banking platform is just one of several key strategic projects within the service organization.
Human Resources It supports all business units through compensation, health benefits, recruitment, employee relations and human resource management, security, project development and leadership training. Group Corporate Affairs Group Corporate Affairs is responsible for providing integrated and aligned with the Group’s internal and external affairs and legal, communications, sustainability and governance. Group activities include organizational communication and sustainable development, community services, legal and corporate secretary of government and industry.
Recommendation Commonwealth Bank should keep developing and maintaining their customer service strategy because it was the main strategy that lead them to the leader of retail bank in Australia and conducting marketing research about the customers and its competitors on regular basis. They also need to have good relationship with their internal customers as well by rewarding the staff by financial and non-financial awards such as bonuses, holiday, recognition, provide a good working environment, etc. s also a good idea because staff that have done a good job or achieved their personal goal should be rewarded to encourage them to maintain a good performance, regular check and audit the operational strategies to identify the problems or gaps that can occur all the time and do more public relation and advertisement for creating a good reputation for the organisation. They also need to be careful about centralization, because it also has some disadvantages, such as the employee may have more experience or expertise on the issue, especially with very little input or cannot say in the decision making process.
This example is a manager who knows more about the needs of the customer’s office. Managers who lack decision-making power in areas of the country may have an impact on their motivation and morale. So, the management level should take some action about this issue to run the business effectively. The format of the different fields are very similar, the customer may like it, as they will know what to expect.
Their policies should be consistency for each department within the business in order to make a greater control and standardisation of procedures. Using the power of ecision to be made quickly because they do not need to consult and negotiate with each branch or department stores. Conclusion Commonwealth Bank of Australia (CBA) is the largest retail bank and the ‘ Big Four bank in Australia, which has a wide range of financial services including retail banking and financial institutions and pension funds, insurance, investment and brokerage services. In 2001, Commonwealth bank has change their structures, which is focusing more about quality of the service, customer satisfaction and product development and service delivery to customer segments.
There are four new business divisions are retail banking services, financial Services premium, investment services and insurance and institutional and business services. In 2008, the management of commonwealth bank decided to change their product structure in order to meet the customers’ needs and improve its business by improving their operational system, offering more variety of services, developing their customer service strategy and using advance technology such as Netbank that allows the clients manage their account online, transfer money, pay the bills, etc.
Commonwealth bank also has a strong centralised leadership which will help the business through difficult times. Commonwealth bank does not delegate decisions to middle or lower management level. Retailers generally have a centralized structure because it is easy to control and manage their organizations. Decisions about the range of products, services and operations of the stores are all at the top of the hierarchy. Centralisation enables the efficient use of resources, lower overheads and tight financial control.
They also used the formalisation structure for their organisation in order to keep everything on track and stick with the policies and standards of the company. Centralized structure is flexible and lead to improper decisions at the local level. This may cause a delay in the decision making process, it is difficult to establish. ‘ One size fits all policy. As organisations grow in size, it becomes increasingly difficult to remain centralized.
This is because it becomes more difficult to create a policy that is right for every situation. In large organizations tend to be decentralized. The current situation of commonwealth bank is stay in a very good position because they have become the leader of retail bank in Australia, which is best in customer service. They also have good reputation because they have donated some money to public, supported sport events and helped environmental saving program.