A Bank-Active in the Banking Industry - Term Paper Example

Name Professor Course Date Organization systems: A bank Introduction An organization is a group of individual who have come up with different interpersonal skills and knowledge to achieve a prescribed objectives and goals. The organization that I am going to discuss in this paper is a bank- active in the banking industry. Organizations Mission The mission of the bank is to enhance a well developed integrity and financial strength through: provision of quality and superior financial services, products, and providing support to the communities in the business environment, providing a professional working environment with job opportunities for the growth of the staff, and providing better rewards for the shareholders of the bank. Organization Goals The organization (the bank) had the following goals: the bank needed to expand in the region through branch expansion, the bank also plans to double its profit margins after every for years, to improve the control environment, the bank focuses on reducing the cost management ratio from 67% to 40 % by 2013, implementation of risk management and core banking system, making an effort of improving the capacity and quality of the people in the business environment by building high performance and cohesion teams, be an admirable bank in the region, develop a robust and tested business continuity plans( BCPs), strengthen and rationalize the brands so as to win consumer preferences, and consider diversification to other services and products like, stock broking, housing finance, unit trust, and investment banking. The combination of the mission and the vision of the bank is the string to its success in the region, making its competitors to have a difficult time to win the clients/ customers thus a good mission and outstanding goals are the drives to the banks success. Banks Strategies As banking business the bank gets its money on the profits from the loans given and the bank deposits that the bank maintains (Abernethy, 19). Today, customers have a large pool of banks and credit unions to choose from. In the market arena there is competition that is to be overcomed thus different banks use different strategies to survive. The following were the strategies used by my bank of choice: Community Marketing The bank uses the tailored local marketing strategies to serve the community in which it is located. Though small the bank is a consumer bank in the region-banks were customers feel confortable and safe. The bank has employed its employees from the local community who can speak English and the local language. With reference to its goals the manager has been further instructed to meet the local community’s needs and demands. Through this the bank has attracted a larger percentage market. Product Bundling Product bunding is a successful strategy employed by the bank it consists, free checking of accounts for those using savings account. The bank has also reengineered a creative bundling solution whereby credit facilities such as mortgages are given to the clients when the interest rates are low or when the community is seeking consolidate debt. Pre-Approved Products It’s believed that consumers readily accept something that they are assured of getting or that they are already approved of it. Buying from this idea, the bank has been identifying customers with positive credit and banking trends. The potential clients are send pre approval letters to notify them of their eligibility of getting bank credits. Teller Referrals In the banks day to day running the clients are at most in contact with the tellers; this are individuals who perform day to day banking transactions such as making deposits, cashing checks, and transfer of money. The bank has been training the tellers on the cross sell bank products as well as showing them the procedures on how to refer a customer to the right person. On addition the bank rewards the tellers according to there performance. Premier Services The bank has designed premier services to the highly net worthy clients since the clients have different expectations and needs. A special set of bankers have been hired to deal with this type of clients. Through the use of this strategy the clients have increased their trust. Creating shareholders values Shareholder Value this is strategic decision making that can affect a firm to have an increase the amount of the cash flow. This is possible over time. There are two main drives of shareholders values, making of wise decisions and the generation of healthy returns. This value is given to shareholders because of the ability the management to increase dividends, earnings, and share price. The shareholders value can be created by: The first way the bank creates shareholders value is by not managing or not provides earning guidance. The bank doesn’t focus on earnings because, the bottom line of the accountant’s approximation doesn’t show the companies value or the change in the values of the reporting period. Secondly, the bank makes strategic decisions that are used to maximize the expected banks value at the expense of lowering the near-term earnings. Thirdly, the bank makes acquisitions that maximize the expected value. This method is used to take value creation to a new level since it guides the choice of the business model. The fifth way is by returning cash collected to shareholders if there are no reasonable value creation chances or opportunities. Creating Customer’s value Customers value is the deference between the requirements of a customer that he/she gets from the product or services rendered and what he/she should give. Defining what the customer challenges the product or service address, how this products/services does to solve the challenges and how the solutions is compared to other services solutions. The customer is not left in doubt to seek for other solutions hence make him/her leave the bank. Through this the bank has been able to maintain its customers. The second method is by not wasting time; the customer is not allowed to do things the bank wants to get information instead the bank does all this for them, and the third method is provision of services that the customer wants. This is achieved by making it easy for the customer to get the services he/she wants since this makes them to incline more on the banks services consequently. Management Information and Organization Levels The organization is divided into three: management, operational, and strategic levels. It is farther divided into sales and marketing, personal banking, retail banking, and the credit sections. The management systems are designed to serve different organizations interests. At the operational level, the management information is used in keeping the tracks of transactions and elementary activities of the organization. For example, giving and delegating of employees tasks and recording the man hours they have worked. The main reason of having such a management system is to be able to answer routine questions through the organization. An example of operational level system is the recording of bank deposits from ATM (Automatic Teller Machine) (Barab, 2). At the management level, the management information system serves controlling, decision making, administrative activities and monitoring of the organization. It’s mostly the activities of the middle managers of the bank. The information addresses questions like what would be the results of the profits if the bank lowers the loans interest rates. The strategic issues are mostly the decisions of the bank that may change the manner it does business. This information is important at the strategic level of the organization. Changes in the business environment in the recent years Economic changes Globalization: this has led to the increase in irrelevance of the national border; the capital market is increasing in mobility and integration over the years, Its has also led to pressure on operations; availability of options in investments like that of mutual funds, its has increased the risk management norms e.g. capital adequacy ratio has increased, the development of vertical integration of banks- offering of insurance (Burns, 26). Technological changes There has been a fast advance in technology that has led to the death of time, distance, and location; it has improved access to knowledge (capital knowledge). Increased use of information technology like internet banking, ATMs, and moving to a paper less office. Social changes There is emerging changes in the livelihood of the community; there has been an increased low-middle-high income household ring. Factors that may influence management accounting system design to contingency theory. Contingency theory: this is an example of a behavioral theory that stipulates that there is no existence of a best way to design organizational structures (Molyneux, 25). It says that the organization of a company depends on the external and internal company’s situation. There are several factors that influence a company to design to this theory like: technology, the consumer interest groups, the customers and the competitors, unions that relate to the bank (labor unions, civil rights unions, etc.), and the government. References Abernethy, M. A. (1995). The impact of manufacturing flexibility on management control system design. Accounting, Organizations and Society, 20, 241–258. Barab, V.P. (2009). “Through a Glass Less Darkly,” Journal of the Kenyan Statistical Association, Vol. 5, No. 41, pp. 13-18. Burns, T.(2006). The management of innovation. London: Tavistock Institute. Molyneux, P, (2003). Foreign Direct Investment in the Real and Financial Sector of Industrialized Countries. Berlin: Springer Verlag Read More