The Strategic Verticals of Davivienda - Assignment Example

? DAVIVIENDA of the of the Table of Contents Table of Contents 2 Executive Summary 3 Implementation, Strategic Controls, and Contingency Plans for Davivienda 3 Backgrounds and Accomplishments 4 SMART Objectives 6 Environmental Scan 7 Strategic Choice and Evaluation 9 Strategies: Alternative 11 Value Disciplines 11 Generic Strategy, Grand Strategy & Recommendation 13 Conclusion 14 References 16 Executive Summary In this paper, the researcher has highlighted existing issues regarding internal communication inefficiencies, increasing cost of operation and lagging project duration for O&M department of Davivienda bank. The researcher has measured each of the mentioned problems and their impact on operational efficiency of O&M department as a whole. Credentials and performance efficiency of O&M personnel has been depicted by the paper in order to convince the investor that these individuals are trustworthy and successful. Creating background study of the problems in O&M department would help the researcher to make visible the importance of the problems among audience. External and internal environment scan in context to O&M department has been done by the researcher in order elaborate scope of the paper. The paper has recommended strategies like implementation of virtual communication portal, enhancement in e-mail communication efficiency, establishment of department consisting of process specialist that would work with O&M department in integrated manner, providing communication training to O&M personnel, implementing ERP system within O&M department, conducting monthly cross departmental meeting to top level management and CEO of Davivienda to improve overall competitiveness of O&M department. Hence, the recommendations should not only improve internal communication between O&M department but also work as strategic initiatives for Davivienda. Implementation, Strategic Controls, and Contingency Plans for Davivienda In this paper, the researcher will discuss about strategic verticals of Davivienda which is a Colombian bank. Although, understanding strategic controls, contingency plans of the bank as a whole is an interesting topic but focus of this paper will be to discuss about strategic perspectives of Organization and Methods (O&M) department of the company. As the report is addressing to key people of the organization hence there is no point in putting company information in the report because it is expected that the key members of the organization such as CEO is completely aware of these information. In short, O&M department of the organization handles issues like coordinating with marketing department to perform operational initiatives, updating administrative reports regarding organizational hierarchy, preparing system manuals, preparing process reports for the entire administrative blocks in the bank. The O&M department works in close loop manner with operational verticals like Human Resources division, Audit section, Information Technology division and General Administration. Now, what is the objective of this paper? Well, to be precise, the report will suggest a strategic plan for O&M department and study will also review the strategic plans that have been discussed in the previous works and suggestion regarding implementation of contingency plans to mitigate the identified risks will also be important part of this paper. Backgrounds and Accomplishments Bouquet, Hebert & Delios (2004) pointed out that financial organization like banks start their strategic planning from understanding the scope of the service offerings. In similar context, Davivienda is a bank and it also focuses heavily on the service and product offerings while making strategic choices. According to Bouquet, Hebert & Delios (2004), there is very little scopes exist for banks to standardize its product portfolio and service offerings rather banks need to adapt to changes in customer requirements and design product portfolio that can be relevant in changing business environment. Roth and Menor (2003) also pointed out that banking service cannot be transported because it requires physical relocation of service receivers and providers. In such context, Vasiliadis (2009) and Qian and Delios (2008) also highlighted the fact that it is very difficult to create a global strategy or mere strategy for financial service providers like banks due to three reasons, 1- intangibility of the service, 2- requirement of physical relocation of service receivers and 3-difficulty in creating suitable performance indicators for intangible offering of the bank. There are possibilities that Davivienda might face similar kind of problems while making strategic plans. However, as the researcher is focusing O&M department only hence the study will consider the existing strategies and problems in the department and improve the existing strategies of the department. O&M department provides support to retail operation in the bank and support to corporate governance practices of the company Davivienda. (2013). In the Organization and Methods Department, there are three positions such as, 1- Department in Charge, 2- Information Analyst and 3- Data Analyst. According to the knowledge of the researcher, all three people holding the above mentioned position is not only capable but also achieved success in their job position. For example, due to recommendation of the personnel in the O&M department, Davivienda has implemented a database management system which has increased data management efficiency of the company by 40%. On the other hand, Department in Charge plays significant role in helping the audit department and senior executives to prepare corporate governance norms and without the support of the other personnel of the O&M department, it becomes difficult for the top level executives to make structured decision on the basis of analyzed information. Presence of O&M personnel is important for the bank due to three reasons such as, 1- the department personnel provide the information support to top level management that can help them to make structured decision recalibrated with the latest changes in the marketplace, 2- O&M personnel provides the information support to other departments in the organization such as Auditing, Human resource department, Marketing department etc and coordination of activities of these departments depend heavily on the information disposition and 3- ethical guideline and corporate governance codes of Davivienda is being created with the help of the O&M personnel intervention. Hence, it can be assumed that without the presence of O&M personnel, it would be difficult for Davivienda to achieve its performance objectives. However, the O&M division is facing difficulties regarding communication between the IT department and end user support. For example, request of users are not getting delivered to O&M department and the information is directly getting entered to system without any processing, due to such inconvenience, customer support service of the bank is getting hampered. In such context, the O&M department relies heavily on paper works and paper waste for the department is almost 35%. Another thing is that, absence of subject matter specialist in the O&M department creates problem for the department to understand process map for individual activities and duration of the project gets extended. Implementing new technology in the department would be a costly affair and to finance the emergent requirements of the department, investors need to invest capital to facilitate the project that can address communication problem in the O&M department. Following research questions can be designed; How O&M department can improve intra-department and cross department’s communication? How implementing new technology can reduce cost of operation of O&M department? How to reduce the development time of a project for O&M department? SMART Objectives Problem statement for the thesis can be briefed as “Improving communication, decreasing cost of operation and decreasing time duration in the O&M department of Davivienda.” SMART objectives for the company can be briefed in the following manner; (S) Specific- The objective of the thesis is to identify existing problems regarding communication, cost of operation and duration of project in the O&M department of the organization and recommend suitable strategies address the mentioned problems. (M) Measurable- Although, researchers need to use longitudinal observations to measure improvement of communication in O&M department but decrease in cost and project duration can be quantified. (A) Attainable/Achievable- Yes, the thesis objectives can be achieved deploying right training and technology implementation. (R) Relevant- It has been already mentioned that O&M department plays vital role in increasing operational efficiency of Davivienda, hence, meeting the above mentioned objectives would not only increase efficiency of O&M department but also increase profitability for Davivienda. (T) Time Bound- Almost 6 months to 9 months will be required to implement the suggested strategic alternatives and another 3 months will be required to make O&M personnel get familiar with the newly implemented strategies and technologies. Hence, within 12 months, the project objectives can be achieved. Environmental Scan External Environment As the focus of the study is O&M department of Davivienda hence external environment for the department would include organizational culture, structure and stakeholders. Mendelow’s Matrix can be used to understand the external environment for O&M department. Figure 1: Mendelow’s Matrix (Source: Pro Active Mgt & Training Ltd, 2013) For O&M of Davivienda, A- the researcher has found that department has little contact with the customers and customers have very little knowledge about functioning of O&M department. Due to lack of involvement with customers, personnel of O&M department often fail to understand need of customers. B- Shareholders and external stakeholders of the bank have little knowledge of the operation of O&M department but they have the power to influence the operational mechanism of O&M department. In such context, improving communication in O&M department would not only increase operational efficiency in Davivienda but also increase return for shareholders. C- Employees in different departments of the bank get periodic information support from O&M department and they are also facing difficulties regarding lack of communication and delay in working of O&M department. For example, due to communication inefficiency in O&M department, efficiency of IT department and end user support of the bank has reduced by 20%. D- This report would create awareness of the communication and other problems of O&M department among Board members and CEO and it is expected that they would take corrective measures to improve the situation. Internal Environment It has been already mentioned that there are only three employees such as Department in Charge, Information Analyst and Data Analyst that are working for the O&M department. At present, there is no subject matter specialist in the department and due to absence of specialist, operational work of the O&M department is getting delayed. The researcher has experienced the fact that the department is still relying on paper works while intra-level communication between department personnel and other departments is not up to the mark. Bronn (2001) and Stro?h & Jaatinen (2001) also pointed out that lack of communication between departments can not only paralyze operational efficiency but also negatively affects the organizational environment. Same is the condition for O&M department and the researcher has found lack of communication between other departments is making O&M personnel completely clueless of operation in other departments. According to the experience of the researcher, delaying in operation of O&M department is not caused due to absence of specialist but also lack of motivation and engagement of team members in the O&M department. Strategic Choice and Evaluation Gregory (2008) & Johansson (2007) pointed out that internal communication between departments is an important issue for organization and especially for departments to coordinate with each other to perform operational activities. Internal communication between O&M department is plagued due to three reasons, 1- relying heavily in paper based manual communication rather than using online or virtual communication to connect with departments, 2- personnel of O&M department do not have proper training regarding how to share knowledge and communicate with other departments of the bank and 3- absence of communication coordinator or specialists is creating problem for the personnel in the department to understand operation of other departments. Hence, internal communication in O&M department of Davivienda is needed to execute in more efficient manner and it will not be sufficient for the department send information in report format to other departments. To be more efficient, the O&M department should take four strategies, 1- enabling complete integration of Wi-Fi and virtual communication portal within the organization that create platform for the department personnel to communicate with other members of the bank, 2- recruiting a subject specialist who can not only coordinate communication in the department but also help O&M personnel to understand the content of the emergent projects and 3- implementing integrated Enterprise Resource Planning (ERP) system can help the O&M personnel to gather information or pass information to other departments, 4- monthly meetings should be organized between O&M departments and other department members in periodic fashion in order to improve knowledge sharing and learning between O&M personnel and other organizational members. Using these four steps can also address the other two thesis objectives such as reducing cost of operation of O&M department and reducing the development time of a project for O&M department. For example, recruiting specialists would increase the understanding of the project among O&M personnel and it is expected that better understanding of the project would definitely chop down the time project completion. On the other hand, virtualization of the communication and implementation of ERP system would definitely replace the manual and paper based operation of O&M department and subsequently the cost of operation for O&M department would come down. Now, the O&M department needs to identify the best grand strategy, value transfer and generic strategy if it wants to improve its performance and operational efficiency. In the next section, the paper will evaluate plausible strategic alternatives that can address communication problems in O&M department of Davivienda. Strategies: Alternative Careful consideration of the research works of Van Ruler (2000) and Moss, Newman & DeSanto (2005) reveals improving communication in the organization or between departments is not easy because there can be multiple ways to improve the communication between departments. Internal communication is not only important O&M department to improve its operational efficiency but also important in increase speed of project completion and reduce cost of operation for the department. Another thing is that the O&M department provides information support to audit, human resource, marketing, operation, customer support and financial departments. At present, O&M department using both paper and e-mail based communication but paper waste for the department is close to 35%. There is no particular ERP system is working for the department that can ensure proper information management while absence of complete integration of virtual communication is also making problem for the department to work in time and cost efficient manner. Although, there is internal portal in the organization but O&M department has no access to the internal portal. However, the O&M division is facing difficulties regarding communication between the IT department and end user support. For example, request of users are not getting delivered to O&M department and the information is directly getting entered to system without any processing, due to such inconvenience, customer support service of the bank is getting hampered. Value Disciplines In this paper, the researcher has selected three value disciplines such as, 1- improving intra and cross functional communication for O&M department, 2- decreasing process time for O&M department and 3- increasing cost effectiveness of O&M department. Dunne (2011) and Berger (2005) found that communication is public relation procedure and only important for marketing and promotional activities but the researcher believe efficiency in of communication within department or between departments is equally important. Now, O&M department needs to develop strategies that can deliver the aforementioned three value principals in order to enhance overall competitiveness. Efficient Communication Although, O&M department of Davivienda is performing well in terms of preparing report of procedures for individual departments, updating administrative studies regarding organizational structures and regulations, providing information support to the top management to prepare corporate governance codes etc but the department fails miserably when it comes to communicating the information to IT department or customer support team in cost and time efficient manner. The researcher has found that the O&M department fails terrible when it comes to communicating with more than 2 departments in simultaneous manner. The department only uses e-mail to send letter of approval or reports to other departments while other activities such information support, managing data etc are being done manually. Due to such manual approach, the bank has failed to address more grievances of more than 30% of customers in the last quarter and efficiency of the customer support team has been slashed by almost 20%. In such context, best practices for the organization would be to implement online portals, Wi-Fi technology, and virtual communication portal between different departments and conduct monthly meeting between O&M personnel and members of the other departments to ensure proper transmission of knowledge and understanding. Manual communication mode should be made dysfunctional after integration of the virtual communication platform. O&M departmental personnel should be encouraged to use more internal portals and e-mails for multiple purposes in order to make them efficient with the newly implemented system. Process Time Reduction & Cost Efficiency At present, O&M department is contributing 35% of the paper wastage costs and cost is also incurred due to their laggard approach to complete a project. Due to absence of specialist, the O&M department is taking time to understand the operational workflow of other departments and on the other hand, lack of cross-departmental communication also creating problem in understanding for O&M department personnel. The researcher will recommend the top level management to implement ERP system in the O&M department which can not only process and store information systematically but also give opportunity to department members to access the information. A separate department consisting of subject and process specialists should be established by the top level management and the established department should work in integrated manner with the O&M department and help the O&M department to understand the process flow in other departments. It is expected that implementing the mentioned strategies would not only speed up the operational process in O&M department but also reduce the variable and fixed cost associated with manual system of communication (Gregory, 2008). Generic Strategy, Grand Strategy & Recommendation Based on the above discussion, O&M department can simultaneously use Cost Leadership and Differentiation strategy to improve the communication effectiveness between departments. Raoprasert & Islam (2010) pointed out that comprehensive improvement cannot be achieved without addressing psychological variables such as employee motivation, engagement, satisfaction etc. In such context, the researcher believe that implementation of the above mentioned strategies can alternatively enhance motivation and engagement level of O&M department personnel. Cost Leadership: Implementing ERP system and virtual communication framework and establishing specialist department would decrease cost of operation of O&M department and such cost benefits would indirectly impact bottom line growth for Davivienda. Differentiation: O&M department should experiment with different virtual communication platforms such as Wi-Fi, social media, online portal, employee feedback etc in order to facilitate the communication and such level of differentiation would indirectly help the company to decrease cost of data redundancies and failure of manual communication procedures. As part of Grand Strategy, top level management should experiment with all the above mentioned strategic recommendations and implement only those strategies that are resource and cost effectiveness. To improve internal communication within O&M department of Davivienda, proper communication training should be provided to personnel in the department and separate knowledge session would be conducted for personnel of O&M department to help them to work in line with newly founded division consisting of subject and process specialists. Frequent use of online and virtual communication would definitely help the O&M department personnel to communicate with each other and other department members in better manner. Monthly meeting and knowledge sharing sessions would not only increase internal communication between departments but will create an organizational environment complemented with trust, knowledge sharing and mutual understanding. Conclusion Throughout the paper, the researcher has addressed key objectives of the paper in systematic manner and approaches the issues in case by case manner. The paper has evaluated existing problems for the O&M department and suggested suitable strategies to eradicate these problems. It has been recommended by the paper to implement ERP system, virtual communication platform and establish department consisting of process specialists to top level management of Davivienda to improve internal communication in O&M department. References Berger, B. K. (2005). Power over, power with, and power to relations: critical reflections on public relations, the dominant coalition, and activism. Journal of Public Relations Research, 17(1), 5-28. Bouquet, C., Hebert, L., & Delios, A. (2004). Foreign expansion in service industries: Separability and human capital intensity. Journal of Business Research, 57(1), 35-46. Bronn, P. S. (2001). Communication managers as strategists? Can they make the grade? Journal of Communication Management, 5(4), 313-25. Davivienda. (2013). Manual on Conflicts of Interest and Use of Insider Information. 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