Commonwealth Bank versus ANZ Bank - Case Study Example

COMMONWEALTH BANK VERSUS ANZ BANK Name: Course: Instructor: Date: COMMONWEALTH BANK VERSUS ANZ BANK The success of any given enterprise profoundly relies on how the top leadership is vibrant and proactive in its response to the ever-changing business dynamics (McNamara 2011). The Great Telecoms Crash in the early 2000s is a recent example of the management caught offside by the changing business dynamics. The results are awful, as it follows massive layoffs of employees who don’t know where to start their next life. Companies that caught up in the telecommunication industry unaware had to embark on unscrupulous methods of survival including fraudulent accounting tricks. However, to avoid such scenarios the management is required to be sharp, vibrant, and visionary studying market trend continuously (McNamara 2011). The banking sector, in particular due to its competitive nature, requires leaders that are continually innovative and proactive to retain the business in the market. Commonwealth Bank founded in 1911, and ANZ established in 1835, (Australian Trade Commission 2011) are among the top banks operating in the Australian market and beyond but have displayed sharp contrasting fortunes. The varying successes of the two companies simply traces to the extent in which Henri Fayol’s management techniques were properly or improperly applied. Just recently, in 2008 to be precise, IndyMac Bank collapsed making it one of largest bank failures in history with reasons attributed to lack of proactive measures to salvage the bank from the 2007-2009 financial crises (Australian Trade Commission 2011). In that case, this paper will show evidently how proper application of the said management techniques can propel an enterprise to success similar to one witnessed in Commonwealth Bank while misapplication can leave the company rocked by challenges seen in ANZ Bank. The most common management functions as outlined by Henri Fayol include leading, planning, organizing, and controlling, but others can be as and when the need arise. Planning is one of the most critical management functions that require organizations to set realistic goals and objectives and institute plans that will see them achieved (McNamara 2011). However, in setting the said goals and objectives, the management should take into consideration the limited resources in the form of time, human and other resources that might be needed. In Commonwealth Bank, planning is at the core of any agenda they would want to be undertaken. The management of the company recognizes that effective planning is imperative for the success of any assignment. After the 2008 financial crisis, Commonwealth Bank embarked on a five-year core banking modernization plans using the SAP solutions ("Commonwealth Bank Of Australia" 2013). The intention of the bank then was to attain customer-centric and profitable expansion using a simple, flexible program that will see them attend to their customers 24/7. Besides, CBA also wanted to accelerate its market growth for innovative and feature-rich products, as well as streamline their business processes and lower operational hitches and risks brought about by legacy systems ("Commonwealth Bank Of Australia" 2013). Fortunately, at the end of five years, Commercial Bank successfully implemented the SAP program and got the full benefits it yearned for (Morrow 2012). The company institute planning strategies right from the branch level to ensure it succeed without any hitches. ABZ Bank, on the other hand, took a different turn failing to plan at all levels, a situation that is attributed to their current woes. One of their outright absences of planning is shown by their failure to penetrate the Asian market (Morrow 2012). The company did not conduct a feasibility study to establish the comparative advantage that any Australian bank might have in Asian markets. Although the company has termed their retreat from the Asian market as something not of a worry, it is just but another show of ANZ Bank’s management failure to plan during their expansion plans. The organizing function is another role that organizations need to take seriously since it will require them mobile all the companies’ physical, financial, and human resources in support of the earlier set goals and objections (McNamara 2011). Effective implementation of the set plans needs the input of staff. Likewise, if it needs a further feasibility study, then finance should be availed in abundance lest the company undertakes investments that they are unsure of the outcomes. Recent success in the majority of Commonwealth Bank investments can be attributed to their timely and efficient delivery of resources needed for the execution of their plans. The human resource, in particular within Commonwealth Bank can be credited to the bank’s latest success. The bank boasts of the most talented and vibrant employees in both their local banks and their overseas branches that have steered forward the success of the bank for decades. During the implementation of the SAP program ("Commonwealth Bank Of Australia" 2013), the leadership of CBA picked a team of their bank staff who were so instrumental in formulating the current management governance of the bank. ABZ Bank has shown absolute inconsistency in backing their plans. Whereas they have supported some aspects of their goals and objectives, others have failed dismally due to lack of support both financially and physically. Although the company used to be known for organizing employee-related programs, the current management has taken different angles. As a result, the company could not retain some of their best talents from poaching by their competitor banks since they are attracted by better employee services offered there. The disorganized overly aggressive plans by the company as seen by their invasion of the Asian market backfired on them. Usually, an aggressive growth-minded backed with the right well-established policies is not a bad idea. However, for the case of ANZ Bank, their overly aggressive ambitions were not followed by well-established policies or rather a bank’s leadership failed to organize well to match their ambitions (Morrow 2012). Another factor that testifies Commonwealth Bank’s success story is the ability of its top management to lead by providing guidance and visionary leadership (Kevin 2002). The success of any organization heavily relies on the top leadership, particularly the chief executive officer. Studies have shown how significant the CEOs are in mobilizing the rest of the staff towards achieving the organizations’ goals and objective (McNamara 2011). Previous CEOs of Commonwealth Bank and the current CEO Ian Mark Narev have been exemplary in steering the bank to unprecedented levels of success. Commonwealth Bank has been topping the Australian best banks chart for three years consecutively courtesy of the board of management of the bank under the leadership of Ian Narev ("Commonwealth Bank Of Australia" 2013). The bank further appreciates the need to mobilize all the staff to move in tandem with the company’s goals and objectives. In that case, the bank organizes regular workshops to familiarize their employees with such goals and initiate plans to facilitate them towards achieving them including training them to will boost their confidence levels. Poor leadership right from the top of the management to the branch level, on the other hand, has characterized the management of ANZ Bank for quite some now (Kevin 2002). Their quest for the right chief executive officer has not been successful, although recently the bank hired the head of Google’s Australian operations, Maile Carnegie to be part of the management, although we are yet to see whether she will turn around the fortunes of the company (Yeates 2016). The leadership of the company has been consistently poor in its decision-making lacking vision in them, a notion that has seen them lag behind in the market, especially at these times when all the banking activities are going digital (Yeates 2016). Fortunately, the board seems to be aware of their area of weakness since they have brought in a Google technocrat, Maile Carnegie. Controlling is another aspect of the management function that is imperative in determining the success or failure of the company (McNamara 2011). Fortunately, the management of Commonwealth Bank has heavily invested on this component of the directorate, and they have been rewarded accordingly. The management’s role in controlling involves assessing whether the actual performances matches what was initially planned. The procedure for the managers during the controlling process is simple since they only need to set standards, deadlines, material yields, and budgets, and later on assess whether they were met. A random check on the working procedures in Commonwealth Bank shows quite a similarity regarding the parameters mentioned above. The bank has well-established performance indicators that gauge the level of performance among the employees right from the senior levels down to the junior levels. The majority of the employees know what is expected of them and what they time they are likely to take to accomplish the said tasks. In ANZ Bank, one of the one of the most vital component of Henri Fayol’s management function of controlling is partially applied (Kevin 2002). Although the bank has set up key performance indicators, little is done to ensure that they are effectively applied. There is no systematic effort by the management to compare the performance of their employees to the predetermined standards, plans, and objectives to ascertain whether they are being or not (Ryan 2008). Such vulnerability has seen the company’s employees being involved in the collapse of a boutique stockbroker, Opes Prime with $650 million belonging to ANZ (Ryan 2008). The involved staff failed to initiate the usual risks controls and governance procedures that could have aided the bank to discover whether the deal was right for investment. In conclusion, the essay expounded vividly on the four major function of management as outlined by Henri Fayol (McNamara 2011). The paper has precisely shown how the application and misapplication of the said functions can be quite beneficial and harmful respectively to any given organization. An organization aspiring for growth should ensure their top leadership applies Fayol’s principles at all times. BIBLIOGRAPHY Australian Trade Commission, 2011. Australia’S Banking Industry. Canberra: Australia Unlimited. "Commonwealth Bank Of Australia." 2013. Australian Financial Publications 5 (9). Willcocks, Leslie, and Peter Reynolds. 2015."The Commonwealth Bank Of Australia – Strategizing From Outsourcing To The Cloud Part 1: Perennial Challenges Amidst Turbulent Technology." Journal of Information Technology Teaching Cases 4.2: 86-98. Kevin, Foley. 2002. "ANZ Chief Remedies The `Evil Sins.' (Best Financial Service Executive)". Australian Financial Publications 11 (8). Lin, Ching-Chung and Shou-Lin Yang. 2016. "Bank Fundamentals, Economic Conditions, And Bank Failures In East Asian Countries." Economic Modelling 52: 960-966. McNamara, Daniel E. 2011. "From Fayols Mechanistic To Todays Organic Functions Of Management." AJBE 2 (1). Morrow, Richard. 2012. "ASIAMONEY Best Domestic Bank Awards: Australia." Euromoney Institutional Investor PLC. Ryan, Peter. 2008. "Top Staff Sacked Over ANZ's Opes Failures." ABC News. http://www.abc.net.au/news/2008-08-22/top-staff-sacked-over-anzs-opes-failures/2589886. Wren, Daniel A. "Henri Fayol As Strategist: A Nineteenth Century Corporate Turnaround". Management Decision 39.6 (2001): 475-487. Print. Williams, Barry. 2003. "Domestic And International Determinants Of Bank Profits: Foreign Banks In Australia". Journal Of Banking & Finance 27 (6): 1185-1210. Yeates, Clancy. 2016. "ANZ Bank Hires Google Executive Maile Carnegie". The Sydney Morning Herald. http://www.smh.com.au/business/banking-and-finance/anz-bank-hires-google-executive-maile-carnegie-20160301-gn74st.html. Read More