Strategic Management within National Australia Bank

Question: Discuss about the Strategic Management within National Australia Bank. Answer: Introduction National Australia Bank is the fourth- biggest financial institution regarding customers and market capitalization in Australia. It is ranked 21st biggest bank around the world regarding market capitalization and 41st biggest bank around the world when measured regarding total assets. It has 1590 service centers and branches and 4412 ATMs in New Zealand, Australia, and Asia and is serving 12.8 million customers. It was formed in 1982 by the merger of two companies National Bank of Australia and the Commercial Banking Co. of Sydney (Bakir, 2005). The bank is mainly committed to providing quality services and products, advice, guidance, relationships and fair fees and charges. It has the goal to provide sustainable and satisfactory returns to its stakeholders. It grew itself in the 20th century by merging with various banks in Australia and around the world. It has major holdings in UK, New Zealand, Australia, Ireland and The USA. These acquisitions were done to diversify the risk and the income of the bank. However, National Australia Bank had to face a very difficult period from the year 2000-2005. In this report, we have discussed the cultural and leadership style followed by the bank and the growth and development of the bank around the period. Various management strategies used by the bank over a period are also discussed in this report. Corporate strategies used for the growth and development of NAB While developing the strategies NAB takes into consideration all the rewards and risks which includes the customer and market segment in which it operates, the external and the internal environment and the degree and sources of differentiation receives from competitors. Its main objective is to deliver to its customers superior returns. To achieve the goals that are set by NAB, it focuses on the prioritization of the customers segment. It is the strategy of NAB to focus on small, medium and micro business customers. National Australia Bank has been using CRM (customer relationship management) strategy for 10 Years which resulted in the expansion and growth of its customer segment. It has recognized CRM strategy as its core value, then after that, they acquired technologies related to CRM (Abbott, Stone and Buttle, 2001). The NAB has acquired various technologies to develop its vision and has developed the infrastructure so as to achieve its vision. One of the key technologies used in NAB is the relationship Optimizer from NCR which acts as a communication gatekeeper and manages the content, frequency and the method used for customer interactions. The various strategies used by NAB for its global business are: For the growth and better performance of the NAB relationship management strategy were used and financial services provided was such that it wins customer interface. It quickens the growth of the global business so as to give the competitive advantage of the NABs efficiency, capability, and service. Developed areas which are good for the growth of financial services. Manage the other business of the bank for value. Develop diversified income methods. As NAB is a global service organization it has improved its IT infrastructure so that it can enhance its services. It had built a WAN environment through which it can connect to the 1200 branches which are around Australia. NAB understands the opportunities and challenges that the external environment and the digital transformation causes and understands that success could be achieved by providing the greater experience to its customers. This could be achieved by making the banking experience of the customers easier and by deepening the relationship with the customers (Ahmed, 2010). Business practices followed by National Australia Bank In the year 2004, NAB incurred huge losses because of unauthorized trading in foreign currency. The procedure and management policies followed by the Bank to manage the risk proved ineffective. In the year 2004, a report came out that NAB has terminated or suspended 31 of its financial advisors or planners (Barat and Spillan, 2012). They were terminated due to reasons like inappropriate advice, conflicts of interest, inappropriate practices or repeated compliance breaches of the code of conducts. The financial advisors of NAB have forged the signatures of the clients, incidents of file reconstructions have taken place, and poor advice was given to the clients which lead to compensation pay-out. The advisors had made attempts to manipulate the files of the clients and forged their signatures to cover up their poor compliance. This behavior was not detected by the internal control system of the bank, but it came into light due to the complaint of the clients or by the query of the regu lators. The strategy used by NAB of Growth by overseas expansion was a huge failure and this strategy came to an end after the demerger of CYBG. Due to the failure of the overseas expansion strategy, NAB was under huge pressure to sell some of its assets. The second business strategy that faced criticism was in the method of raising funds. NAB raised funds through private placements which mean selling shares to small investors or individual by making them available the shares at a lower price than its market value (Howe, 2001). The criticism that NAB had to face due to this method is that firstly it sells the shares at a lower price than its market value and secondly in the situation of global financial crises it leads investors to demand more compensation for taking the securities with high risks. The image of NAB has suffered huge losses due to its scandal in financial advice, disputed fees, insider trading and rate fixing allegations. The threats and opportunities faced by National Australia Bank SWOT is a technique which is used to find the weaknesses and strength of the organization and the threats and opportunities that the organization faces. This technique was used by managers widely to know the companys strategic situation. Due to the strategies and business policies followed by NAB various opportunities were made available to National Australia Bank. The good amount of opportunities and revenue increase is created because of its acquisition of The Western Bank in the US. Expanding its business in China has also increased its market share and revenue. Positive outlook towards asset management also creates ample amount of opportunities for National Australia Bank. The strength of National Australia Bank is its geographic and product diversification. Because of its diversification, it becomes a leading financial player (Vit, 2006). Spread in management yield increased its revenue and interest income. Its good financial performance helped in contributing towards group prof itability. However, the slowdown in the domestic and global economy affected the financing facilities and the business volume of National Australia Bank. The profitability of Australia is also widely affected due to the competition in the financial system of Australia. Because of this declining revenue, the growth activities of the NAB also get widely affected. They made the available investment in finances so that the customers can manage their finances themselves. They used the concept of Fair value which has four keys to it: providing quality services and products. They entered into a partnership with the company called rediATM and opened a large number of ATM which helped customers to have access to fee-free banking services. They provided information on the interest rate which helped customers to understand the mortgage. A business can run successfully only if it keeps pace with the changing market conditions and for this innovative business, practice is important. NAB understa nds the importance of innovation, and they build the fairer business model which increased the transparency (Deng and Liu, 2014). The approach of NAB towards corporate responsibility helps it to make a sustainable and positive impact in the life of people, customers, environment and the communities in which it operates. It helps to create the value of shares for the stakeholders. It focuses on the rights and the development of its people and the customers. It delivers the programs which support the society both financially and socially. They have developed a strategy of corporate responsibility which sets the policies, objectives, strategies and procedures for the organization and helps in reporting and measuring the progress of the organization. It had been an internal communication system to ensure that the corporate responsibility is understood by the leader, board and all the people concern about it. Organizational Culture and Leadership Style followed in NAB Culture and organization cannot be separated from each others, and they are one and the same. With the help of strong culture, the vision and strategies framed by the organization can be executed successfully. Among the many variables that exist in the organization culture is a very important variable and it impacts the functions of the organization. The two culture scale that is used widely is weak/strong and inefficient/efficient. The cultural scale which is based on strength evaluates and measures the power that culture has on the employees. The cultural scale which is on efficiency measures the culture of the entities fulfillment of strategy and goals (Dellaportas, Cooper and Braica, 2007). If the culture present in the organization is efficient than its becomes easy for the organization to achieve its goals. NAB has various human resources policies and programs for the development of its employees. It has people framework policy which helps the employees to know about where thei r career is going and where it should go, Self-initiated program, talent management program and development and performance plans. The three perspective of culture is integration perspective, fragmentation perspective, and differentiation perspective. The integration perspective acts as glue which holds the organization together. The top management is considered the most influential and they form the values of the organization, which helps in influencing the behaviors of the employees whereas differentiation perspective is just the opposite and it is the lack of cultural manifestation among the members of the organization. The basic assumption of differentiation perceptive is that different organization has different cultures. According to fragmentation perspective, the culture is neither clearly inconsistent nor clearly consistent. Mismanaging the organizational culture can have a very harmful effect on the culture of a particular organization. The organization was more inclined to wards profits and they sacrificed the ethical behavior to earn more profits. Profit is King phase was used which means earning short- term profit was more important than long term goals due to which unethical behaviour was carried on (Jain And Bennett, 2006). The NAB leaders tried to manage the balance between profits and risks. It is very important to build genuine relationships with the customers, and this can be done by understanding their needs and requirements. As a part of NABs leadership style, it trains its employees and develops management process which helps in preparing high potential and high- performance employees. It makes available the career development opportunities for its employees. The behavior and the standards of responsibility that we expect from people are developed by the codes of conduct followed by the organization. All the employees, directors, and the people concern should follow the codes of conduct as framed by the organization for the development of t he organization and the employees (Mihaela, 2014). Conclusion National Australia Bank was committed to providing fairer banking services to its customers and worked towards building a relationship of trust with the customers. It abolished the range of fees and helped the customers who faced financial hardship by helping them to manage their finances. The duties of directors need to be reformulated so that they consider environmental and social responsibility an important aspect towards the growth and development of the organization. The reporting requirements need to be reformulated in the system of corporate governance so that the burden of proof is shifted to the persons who caused harm to the organization. The process of regulation, governance and supervision are not to be seen as measures which restrain entrepreneurship and innovation, but it acts as an instrument that helps in restoring the trust of the clients and ensuring that the activities of the bank are conducted fairly, openly and sustainably. As there is a high competition that Nat ional Australia Bank has to face therefore, it should improve its management and service deliverance to remain in the competition. 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