The Strategic Development within an Organisation
Westpac Banking Corporation was initially founded in 1817 with the name of Bank of New South Wales and was considered as the first bank which was established in Australia. Later on in the year 1982, the Bank of New South Wales has gone through the merger with Commercial Bank of Australia and named as the Westpac Banking Corporation. The financial sector of Australia provides the contribution in the total output of the country.(Vincent,2016). Westpac has its headquarters in Sydney, Australia and is considered as one among the four major banks of Australia. Westpac has the diversified portfolio which will be divided into two segments, ie. Customer oriented and Institution oriented. (Westpac.com.au.2018). The mission of the organization is to provide help to the members of society in increasing the wealth, and the organization is also working on the mission statement by providing financial services to the public of Australia and NewZealand.
STRATEGIES DEPLOYED BY THE COMPANY
Westpac does not aim for satisfying its objectives at its cost partners, i.e., its clients, representatives, investors, and government. The delightful client can be turned into delighted and loyal customer in future. By adopting , it consistently works for consumer loyalty (Westpac Group Annual Report, 2017). The organization is given due significance in terms of organizational working. Association has exhibited very positive approach towards corporate social duty and has confidence in moral business. Besides, it has been self-assured person towards hierarchical switch and dependably thinks of imaginative plans to beat such circumstances (Katsioloudes, 2017). This blend of estimations of Westpac has enhanced work effectiveness and quantifiable profit. Offering because of significance to different budgetary parameters like liquidity, working proportions, resource quality, and so on., it has kept up its driving position until today.
The main organization objective is to maximize the return on capital , by maintaining the strong customer relationship , by providing due importance to this objective. The strategies that have been deployed by Westpac is the continuous focus on the core market by creating the growth opportunities in Australian and New Zealand market. (Westpac.com.au. 2018) The company also worked on the creation of investment by the expansion of products and services in the market. The company
also worked on the integration of banking and wealth services by the creation of fund management and equities n the market, by increasing the business network and the diversified workforce by focusing on cost and productivity.
CONTROVERSIES WITH RESPECT TO STRATEGIES
The company is focussing on maintaining the return on capital and focus on customers as their effective strategy for the overall development of an organization. The Board is in charge of favoring the Westpac Group Risk Management Strategy and Westpac Group Risk Appetite Statement and for checking the viability of hazard administration by the Westpac Group, including fulfilling itself through fitting announcing and oversight that suitable interior control components are set up and are being actualized as per administrative necessities. (ABC News 2018) The company also ramps for responsible reinvesting as the banking company excludes the companies that will deal in the manufacturing of weapons like anti-personnel mines and nuclear devices and in the same way Westpac adopt the strategy for the tobacco manufacturers and the whaling industry , which will lead to the reduction in the social and environmental risks .(Westpac.co.nz 2018)The bank has also reduced the investment in the companies who have the poor track record of ESG risks.
The Pestle analysis of Westpac are :
The political environment of Westpac focuses on the budgetary repair by changing the economic scenario ,by declining in investment which will affect the funding of the bank. (Salim,2016) The company also followed the four pillar policy for maintaining the level of competition in the banking industry by the adoption of Australian Foreign Acquisition and Takeover Act 1975.
The bank helps in increasing the business activities by providing low-interest rates which will ultimately increase the demand for loans and further new investments. (Weber,2016) In addition to that, the bank also tightened the monetary policy by pushing the central bank to maintain the cash rate at 2.5%.
The bank provides the dedicated team to the aging population for the facilitation of Self managed super funds, by supporting them in a diversified way and provide an online platform for their account openings and also set up the advisory board for the support of the customers. (Crowley,2016)
The bank aims at digitization policy by aiming at focused customer strategy by the intervention of new technologies which will increase the experience of customers in doing banking services. The bank also provides the smart devices to the customers for availing the banking services 24 / 7 as per their convenience.
The bank needs to consider the scarcity of natural resources by providing various lending and investment related strategic decisions for the long-term and sustainable growth by the adoption of inclusive approaches by including their suppliers and customers. (Klettner,2014) The bank also introduced the green bond with the world bank for the protection of the environment in terms of resource efficiency and efficient power use.
The bank has the action suit plan by charging heavy penalties to the consumers for the credit card payment delays, or for making transactions that will exceed the credit limit. (Bottomley,2017) The bank continuously keeps an eye on such transactions as if these activities will not be checked it will lead to the harm of goodwill of the bank.
The SWOT analysis of the company is as:
The strengths of Westpac that has been considered in achieving the strategic development is the use of strong asset quality that will be achieved by lowering the number of loans which will ultimately lead to the increase in the overall cash earnings by 8%. The company is also considered as the 100 most sustainable organizations at Davos. The operating profits of the company have also shown the 5% increase in terms of sales and profits. (Laszlo,2017)the company also focus on workforce diversity by launching of the program for the Australian consumers, which will ultimately lead to a high customer base.
In the year 2015, the company failed to meet the shareholders expectations in terms of profit , which will reduce the shareholders of the company in the next financial year. for this, the company has to use the dividend reinvestment program for the rise of capital. Another weakness is that the social justice law firm has filed the suit against Westpac for rescuing the customers from late credit card fees.
The bank moves towards the digitization process which will provide 24/7 services to the consumers . New banking apps have been providing to the customers for the management of their own funds. (Liu, 2017) The bank also has the higher penetration percentage of 20.1% in the wealth management sector which help the bank in occupying the top position.
Risk mismanagement is identified as the major risk or threat to the bank as it leads to adverse credit and loss of goodwill due to the inappropriate decisions. The company has to focus on these risks as it will impact the financial performance of the company.
FIVE FORCE MODEL
Threat of new entrants
New entrants in the industry will tend to reduce the competitive edge of the Westpac by reducing costs and providing new values to the customers, and for that, the Westpac has to build the economies of scale for lowering the fixed unit cost.
Bargaining power of suppliers
The powerful suppliers of the market will use their bargaining power to lower the overall profitability of the bank and for coping up with this problem the company has to maintain the efficient supply chain by creating the dedicated suppliers.
Bargaining power of buyers
The company has to build the large customer base for reducing the bargaining power of buyers as the less number of buyers tend to put pressure in terms of getting the best services at little prices.
Threat of substitute products /services
For tackling the threat of substitute products, the bank has to focus on service orientation rather than the product orientation, by understanding the needs of customers and focus on increased switching cost.
Rivalry among the existing competitors
The strategy that should be adopted by Westpac for tackling the rivalry among the competitors is by building the large economies of scale and by making collaboration with the existing competitors for increasing the market share which leads to fewer competitors. (Al Jerjawi,2015)
ORGANIZATION CULTURE OR LEADERSHIP STYLE
Westpac serves 12 million delighted customers in Australia and NewZealand which helps in the creation of the distinctive mix of skills and ideas which ultimately leads to extraordinary results. Westpac is focused on pulling in and growing socially assorted administration ability, fabricating a socially various and comprehensive workforce, and advancing mindfulness and comprehension of social decent variety and incorporation crosswise over corporate Australia. (Westpac.com.au. 2018) The company believes in the culture of giving by adopting various initiative measures. The bank has adopted the concept of social responsibility by adopting the initiatives like the formation of new board committee which will focus on corporate sustainability by using the frameworks like Global Reporting Initiatives. (Liu,2015) The company followed the structured approach to the satisfaction of customer and stakeholders by the appointment of polite and dedicated staff which will help in enhancing the corporate image of Westpac in the banking sector of Australia.
ANALYSIS AND RECOMMENDATIONS
By making an analysis of the various key factors of Westpac like Mission, Vision and the strategies that are adopted by the company , by keeping in mind the environmental analysis , it is possible for the company to improve the strategic fit by improving the overall profitability. (Pomering ,2017)As the current strategies that are used by the company helps in achieving the goals, but the recommended strategies will help the organization in improving its services in the foreign market as the company should adopt the concept of product differentiation by providing extraordinary services to the customers who turned in the competitive advantage of the company. Another recommendation for the company is that they have to adopt the penetration strategy , by getting licenses from other foreign countries for opening its branches in that countries, which helps the Westpac in creating the global presence in the market.
The present report helps the researcher in highlighting the corporate strategies of Westpac by the use of various elements like pestle and swot analysis. The bank has secured the second position in the banking sector of Australia by the use of effective strategic analysis. In addition to the present strategies, the organization has to focus on the creation of new branches in the developing economies, which will ultimately lead to benefit in terms of efficiency and output. The organization also tends to focus on the performance analysis , which helps in making improvement in the areas of need. (Strong,2016) The company has many strengths which make the organization the market leader in the country like goodwill , adoption of social responsibility strategies , but the company also suffer from various weaknesses like, competition in the market and the bargaining power of suppliers and customers due to intense competition and for that the organization has to maintain segmented performance for overcoming the weaknesses and the threats.
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