Strategic Concepts An Assessment of ANZ Bank †Free Samples

Question: Discuss about the Strategic Concepts An Assessment of Strategies of ANZ Bank. Answer: Introduction and Company Brief Strategic concepts or business strategy assists a firm in carrying out its functions and achieving its goals and objectives. A sound business strategy helps a firm in attaining competitive advantage and creating customer value (Henry, 2011). Australia and New Zealand (ANZ) Banking Group is one of the largest banks in Australia. It was establishes in 1951 when Bank of Australia merged with Union Bank of Australia (ANZ, 2017). The bank specialises in retail and corporate banking products. The bank has more than 50000 employees worldwide and is also one of the largest banks of New Zealand. ANZ bank has tried to expand globally via acquisition strategies and is one of the leading banks in Asia pacific region(ANZ, 2017). The following analysis will try to elaborate on certain strategic concepts used and applied by ANZ Bank. Methods This analysis tries to understand various strategic concepts pertaining to ANZ bank with the help of secondary information and data. The information has been collected from secondary sources like company websites, books, newspaper articles etc. The analysis also uses deductive techniques to arrive at conclusions relating to application of various concepts (Takhar-Lai, 2014). Deductive technique is used to derive conclusions from existing facts and secondary information is information which is already published in some book, magazine, journal or any other literature source(Takhar-Lai, 2014). Therefore, with the help of existing information conclusions have been made about use of strategic concepts by ANZ bank. Analysis of Business Strategies of ANZ Bank Using Strategic Concepts Analysis of business strategy provides various tools through which a firm can assess its internal and external environment(Stroh, 2014). An assessment of external and internal environment is important for the firm to assess its standing in the industry. A major way through which a firm can assess its environment and its standing in the industry is SWOT analysis and Porters five forces analysis(De Pablo, 2013). The strategies of ANZ bank will be discussed with regards to these two analyses. SWOT Analysis of ANZ Bank Banking sector is an expanding sector in Australia and globally(Collardi, 2012). A SWOT analysis will help in understanding the situation of ANZ bank with respect to the banking industry(Bamford West, 2012). It will help in assessment of strengths, weaknesses, opportunities and threats faced by ANZ bank in the banking sector. SWOT Analysis of ANZ Bank Strengths It is one of the largest banks in Australian and New Zealand and has a respectable presence on the global stage. Diversified product portfolio helps in reducing operational risks. Large market share in Australia, New Zealand and countries in Asia pacific helps in generating more revenue Sound financial position leading to better marketing budget Good brand name Old and reputed company Weaknesses Limited global exposure as compared to many big global giants like HSBC High training cost of employees due to skill orientation of the industry. High cost and expenditure on digital network and IT servers High marketing cost due to heavy competition Opportunities Increasing banking potential all over the globe Increase in income levels and banking habits in emerging market. Governments in emerging markets promoting good and reputed banks Threats Functions in a tough industry which gets affected by global economic fluctuations Banking industry in emerging markets is highly regulated and trust of people in private banks is less Very high competition in both local and global markets Table 1: Source: Made by Author (2017) Adapted from ANZ (2017) Therefore, through a SWOT analysis ANZ can understand how it can proceed further in the industry and the market. It can assess its opportunities and strengths and use these strengths to counter weaknesses and threats. Porters five forces model for ANZ bank It is also important for business organisations to assess relevant specific factor affecting the organisation(Aaker McLoughlin, 2010). This can be done through Porters five forces analysis. This analysis assesses the firm based on five factors which are relevant to the firm(Alkhafaji, 2013). Following is an assessment of porters five force model for ANZ. Rivalry among existing firms- There is very tough competition in the banking industry both locally in Australia and also in global business scenario(Collardi, 2012). There are many big and reputed firms in the industry. Therefore, it is difficult to increase market share. Hence, rivalry among existing firms is high. Threat of new entry: ANZ exists in a heavily licensed industry and in emerging markets the sector is very highly regulated.(Berges Guill, 2014) Additionally, a lot of financial and technical cost and marketing goes into setting up a bank(Collardi, 2012). Therefore, threat of new entry is low. Threat of substitute products: people also like to invest their money in stock exchange and mutual funds; however, the trust of a bank is far greater(Collardi, 2012). Especially in emerging markets. Banks command greater trust than stock markets. Therefore, threat of substitutes is low. Bargaining power of buyers: As the industry is regulated, most banks offer similar services. However, brand name and trust are very important factors which differentiate between banks. Due to brand name the customer is pulled towards a bank and due to regulation he cannot bargain much(Collardi, 2012). Therefore, bargaining power of buyers is moderate to low Bargaining power of suppliers- Banks have suppliers like back end suppliers of logistic goods, infrastructure suppliers, employees who supply labour, IT support suppliers etc.(ANZ, 2017). As banks have trust of customers and ANZ has a good brand name, bargaining power of suppliers is moderate to low. Therefore, through Porters five force mode ANZ can understand its micro level dynamics and evaluate how to proceed considering the above mentioned factors. Other Relevant Information Pertain to ANZ Bank There are various other strategic concepts which affect a firm like ANZ(Eden, 2013). For example, segmentation, targeting and positioning strategies are considered of prime important in the strategic formulation of a firm(Ferrel, 2012). Generic strategies like cost leadership and differentiation also affect a firms market position(Forgang, 2015). Additionally, the type of leadership and financial performance also plays a vital role. Generic Strategies of ANZ Bank Porter has given three generic strategies which determine how a company generates competitive advantage for itself(Salavodu, 2015). These are low cost, differentiation and focus. A firm can perform better than its competitors either by having lower costs or by differentiating itself from the competitors in certain way(Walker, 2015). It can also choose between focus that is, offering its products to a selected segment or choosing an industry wide offering where it offers the products to a large customer base. ANZ bank exists in a service industry where service offered is homogenous(Bateson, 2010). However, the firm tries to create differentiation by offering a wide range of services like investments, deposits and loans(ANZ, 2017). The firm also uses market wide offering and tries to targets a wider market base so that it can increase its market share(ANZ, 2017). The firm has also expanded globally and focuses on efficiency and service quality. ANZ bank is a very old company and has a good brand name(ANZ, 2017). People recognise the firm which inculcates trust. Therefore, its brand equity is also a differentiation factor for the firm. Though differentiation of services based on quality of service delivery and brand name, ANZ bank has been trying to perform better than the competitors. Segmentation Targeting and Positioning Strategies of ANZ bank Segmentation, targeting and positioning are one of the most important concepts of strategicmanagement and marketing strategy(Baines, 2013). Segmentation is a concept of dividing a market into groups on the basis of certain identifiable similar attributes. Segmentation includes identifying groups in the market on certain basis and identifying the characteristics of each group (Armstrong, 2012). A firm can use various types of segmentation like demographic, geographic, psychographic and behavioural segmentation to identify subgroups in the market. ANZ bank uses various types of segmentation strategies for its various products(ANZ, 2017). It uses demographic segmentation based on income while selling its loan and insurance products. The firm also differentiates rates between clients based on individual and corporate clients(ANZ, 2017). It uses geographical segmentation and divides its markets based on country where it is operational(ANZ, 2017). It uses different marketing strategies in each country like New Zealand and other Asian countries. Targeting is deciding on which customer bases or segments to target (Baker, 2012). It involves deeply assessing each segment and its commercial attractiveness. It involves selecting one or more segments after analysis (Ireland Hoskisson, 2011). During targeting a firm decides whether it wants to focus on a small customer groups or a larger customer group(Baines, 2013). It also decides on the resources to be used for the purpose of targeting. The major segments on which ANZ bank focuses are demographic and geographic segmentations.(ANZ, 2017). The firm uses various marketing strategies like advertising, branding and sales promotion to target these segments(ANZ, 2017). The firm targets small, medium and large corporate clients and individual consumers to sell its products. Positioning is the image that is created in the customers mind regarding the brand or a product (Kapferer, 2012). Brand is the name of a product or its design which creates an instant recall in the mind of the customers regarding the product with which the brand name is associated (Ferrell Hartine, 2012). Popular products and companies become brands in themselves because consumer has an instant recall of these brands if any attribute of these brands are mentioned (Boone, 2011). Branding is very crucial for adequate positioning as branding creates a positive image of the product in the customers mind(Aaker, 2012). ANZ is an old and established firm hence; it has become a brand(ANZ, 2017). People associate it with trust and service quality. Therefore, ANZ bank has a positive brand positioning. Firms can use various positioning strategies (Ferrell Hartine, 2012. These include positioning the product based on lower price, product features, better quality, better service delivery or product applications(Alkhafaji, 2013). In other words the firm can position the product in the mind of the customer based on its unique selling point. If the firm offers products at higher quality than the competitor, then that could be its positioning strategy. On the other hand, if the firm offers a product with unique features then it should position the product on this attributes(Kotler, 2012). ANZ bank has positioned itself based on quality of service delivery. It believes in providing quality and fast banking services to its customers(ANZ, 2017). Through its positioning as a renowned brand with quality focus, ANZ caters to its customers both in Australia and worldwide. Therefore, segmentation targeting and positioning are very important strategies which allow a firm to decide on which customer group it wants to cater and the manner in which it wants to cater to it(Armstrong, 2012). ANZ is successful in creating a sound segmentation, targeting and positioning strategy. Financial Performance of ANZ in 2016 Financial performance of a company shows its profit and loss, revenue, net sales and other financial indicators(Butler, 2012). Financial performance shows the superiorly or growth of a firm. Therefore, firms are very couscous of their financial performance(Butler, 2012). The profit of ANZ bank in 2016 was $ 5700 Billion(ANZ, 2016). It has come down by 24 % if compared to profits in 2015(ANZ, 2016). The reason for fall in profit was tough international competition. The firms life insurance product is not doing too well and it may exit from this products(ANZ, 2016). To improve its financial performance the firm needs to analyse the major causes for the fall in profit and formulate strategies to combat them. For example, undertaking a competitor analysis and trying to assess how it can outperform the competitor. Leadership of ANZ bank ANZ bank is a public concern and is listed on both the Australian and New Zealand stock exchange(ANZ, 2016). The company is responsible for its actions to its shareholders. It holds an annual general meeting of the shareholders periodically(ANZ, 2017). There is a board of directors to run the organisation on a daily basis. Board of directors are elected by the shareholders. David Gonski is the chairman of the bank while Shayne Cary Elliott is the CEO(ANZ, 2017). The vision of the leadership is to become a superregional bank and to provide quality service with mass reach to its customers worldwide(ANZ, 2017). For this purpose the bank believes in investing in infrastructure, endowment of employees skills and delivering services with efficiency(ANZ, 2017) .The leadership believes in integrity, accountability collaboration respect and excellence of service quality(ANZ, 2017). The leadership aims to continuously improve service quality so that the firm can win the trust of customers and embark on a growth path. Product Life Cycle of ANZ Banks product Product life cycle is a sequence of stages through which product of a firm passes(Armstrong, 2012). These stages include introduction, growth, maturity and decline. In the introduction stage the branding and the quality level of the product is established. In the growth stage product starts becoming popular and its features and support services get established(Armstrong, 2012). Pricing is maintained and distribution channels are added in this stage. The product sees a growth in sales in the growth stage. In maturity stage the growth rate of sales of the product starts to diminish(Ferrel, 2012). Competition becomes tougher as other firms come up with similar products. In the decline stage the product sales decline. During decline stage, product losses its popularity (Armstrong, 2012). Firm can choose to either divest or harvest the product depending on the further opportunities Most firms try to maintain the product on maturity stage for a longer time(Armstrong, 2012). This is done by lowering prices, adding other features, giving additional services or doing intensive distribution so that the decline stage can be avoided for a longer time. The products of ANZ involve financial services like providing loans and advisory services. Risk management, fund raising and investment along with deposits are some other products(Farquhar, 2010). Most of the products are on maturity stage as there are many competitors and the firm has to do aggressive marketing and offer additional services to maintain the products on the maturity stage(ANZ, 2017). However, the life insurance and wealthmanagement business is seeing loss in profit leading to decline of the product(ANZ, 2016). The firm has now decided to exit from these two product portfolio. Therefore, product life cycles help a firm in understanding the stage on which the product is and consequently it helps in taking adequate strategies pertaining to the stage. Recommendations for further strategies ANZ is an old and reputed firm however; its profits have fallen in the last year. There is always a scope for improvement in all organisations. There are certain things that the firm can do to improve its performance and standing in the market. Following are some recommendations to ANZ which might help in improving its performance. 1 The current era is an era of globalisation. Though ANZ bank is expending and is present in many countries across the globe, it is not really utilizing the opportunities offered by the emerging markets. The firm should be more aggressive in its marketing strategy in the emerging markets. The company is not present in many emerging market countries where it should make its mark. This can be done by using market entry strategies like mergers and acquisition. Merger with local banks will help the bank in winning the trust of the people in the host nation. 2 The firm should try to increase its market share in Australia as well. For this purpose the firm should have aggressive marketing campaign. It can also use engagement of people via social media as a tool. Social media is a very potent and cost effective medium to carry news and information to a large audience. Bank can generate ideas, reviews and feedback via social media to improve its brand recognition and market share in the country. 3 ANZ bank is into financial and banking services which work on trust. The financial services are high involvement products. If the firm wants to expand in global markets, it needs to win the trust of the people. This can be done by improving brand equity. Repeat ads can help in creating brand equity. Customers tend to remember a company if they see its advertisement frequently. Therefore, the firm has to be more visible. Using print, public relations and social media for promotion is also a good method of customer engagement which can help build brand equity and trust which can lead to better sales in the emerging markets. 4 As ANZs profits have declined lately, to stabilise itself it must reduce cost. Cost efficiency can be achieved by closing down non performing branches. ANZ should focus more on urban areas and should not move towards rural markets of the emerging markets as yet. Another way of reducing costs is by educating customers to use the virtual medium to conduct banking transactions. This will help in reducing footfalls into the branches and the bank can cut down on number of employees and other infrastructure with in a branch leading to cost efficiency. 5 Services industry is highly people and technology intensive. If employees are skilled they will be able to conduct the service better. Therefore, ANZ bank should enhance its talent development and training system. The firm trains its employees on work skills but it should also include transferability skills and knowledge endowment into its training schemes and plans. The firm should also give training about impact of global fluctuation on the banking sector. Additionally, it should promote lifelong learning. This will help in continuous supply of knowledge in organisation and help the staff in continuously giving good service. Therefore, above mentioned recommendations can help ANZ in improvement of its strategy and provide it a way to survive in tough competition. References Aaker, D. A., (2012) Building Strong Brands. New York: Simon and Schuste. Aaker, D. A. McLoughlin, D., (2010) Strategic Market Management: Global Perspectiv. New Jersey: John Wiley Sons. 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