The UBS Bank - Essay Example

UBS Bank of the of the No. UBS Bank Company Analysis UBS Bank is owned by the popular multinational financial service providing company of Switzerland, UBS AG. The headquarters of UBS AG are located in Basel and Zurich. UBS Bank was initially founded long back in 1856 and the full formal name of the organization was Union Bank of Switzerland. However the name UBS, became representative in nature after the bank merged its services with the Swiss Bank Corporation in 1998. UBS bank is known to be the largest banking corporation of Switzerland. It conducts its operations in more than 50 different countries of the world and generates employment opportunities for a large strength of workforce. The bank helps in mobilizing and investing private wealth assets in a global forum (Cranny and Patterson “UBS CEO Says Emerging-Markets Selloff Is Overdone”). It provides efficient commercial as well as retail banking services in the market. The bank significantly influences the monetary base of Switzerland and receives an adequate financial and fiscal support from the Swiss government. Mission and Vision Vision The primary business vision of UBS Bank helps it to become goal oriented in nature. The organization desires to become the best banking service provider in the world. The bank aims to constantly upgrade the quality of its services and provide innovative solutions for protecting and incrementing global wealth (Cranny and Patterson “UBS CEO Says Emerging-Markets Selloff Is Overdone”). Mission Across all its 50 different business branches, UBS Bank desires to link its customers with the leading financial centers of each country. The company geographically diversifies the wealth of its global customers. By following its primal business vision, UBS Bank tries to efficiently manage and build the wealth of its customers. It preserves global wealth in the most cost effective pattern (HSC “The International Business Cycle”). Furthermore, the bank assists in the global economic growth and promotes to enhance world savings as well as investments through innovative means. Current Strategic Plan and Direction UBS Bank provides innovative and effective financial solutions to its global customers, but through this the company generates more steady and attractive returns to its business stakeholders. The current business strategies of the bank are formulated on the basis of its Global Asset Management and Investment Banking division (UBS “Our Strategy”). This is because, these two primal business branches of the company possesses three beneficiary features. Capital efficiency Increased competency for the targeted clientele Better profitability and structural growth outlook UBS Bank tries to enhance its brand value and economic surplus by productively strengthening the financial position of other commercial business firms in each of its market (UBS “Our Strategy”). However the ambitious business level strategies of the company are pioneered by its steady capital strength. The long term strategic direction of UBS Bank can be evaluated in terms of a strategic direction Ansoff matrix. Figure 1: Ansoff Matrix Existing Products or Services New Products or Services Existing Market Accounts for retirement, savings and payment provision. Maestro cards Credit cards Special club key bonus program Free banking facilities for non youth Special mobile and e-banking facilities New Market Accounts for retirement, savings and payment provision. Maestro cards Credit cards Special club key bonus program Local language specific services Market Penetration: The market penetration strategies of UBS Bank relates to the products and services offered by the organization in its existing marketplaces. The demand deposits of the bank are not only used for mobilizing the savings of its clientele but also assist in providing payments and pension facilities to the depositors. With the help of Maestro cards the customers of UBS bank can withdraw money from the Switzerland as well as other foreign countries (UBS “Our Strategy”). The prepaid and credit cards of the company are used for making cash free payments. Through the club key bonus program, the bank provides special incentives to its loyal customers. Market Development Through the market development strategies, UBS Bank expands the scope and scale of its business internationalization process. After the subprime mortgage crisis in 2008, the aggregate money supply and productive investment volumes of several western economies had significantly declined (UBS “Our Strategy”). Recession in the western economies reduced the profitability and revenue of the financial banking and non banking institutions in these economies (Tucker 222). After 2008 onwards, UBS has started to expand its operations in the emerging economies such as China and India. Aggregate money supply, savings and investment propensities of these economies are increasing in the modern era (Tucker 244). UBS bank provides its standardized services to the customers in the new markets. Product Development Through the product development strategies, UBS Bank offers new services and products in its existing markets. The bank has recently introduced free banking services for non income earners such as children and youth. Through this the bank aims to enhance savings habits among the young generations. Special e-banking and mobile banking facilities are also provided by UBS Bank (UBS “Our Strategy”). The internet penetration rate is high in Switzerland and other western developed economies (Mankiw and Taylor 154). The modern individuals desire to conduct banking services over internet and media. Through internet oriented services the bank is able to capture larger strength of potential customers more cost effectively. Diversification Since UBS Bank is a multinational organization; it strategically implements differentiated strategies in business. The marketing strategies of the bank are formulated on the basis of external and internal business environment of each country. For instance, the bank provides services through different languages in different economies (UBS “Our Strategy”). Organizational Culture and Structure UBS Bank shares a high brand value in both corporate and retail banking industry. The working culture of the company is defined in terms of three major pillars. Feel Valued The Company claims to provide enormous value to the contribution of each of its customers in the market. The hard work and personal contribution of the workers of UBS Bank are highly regarded and respected. Opportunities to Develop UBS Bank creates a learning workplace culture for all its employees and assists in professionally empowering the employees. Collaborative Performance Culture The employees of the bank resolve all the strategic organizational tasks and objectives in a collaborative manner. Organizational Structure The headquarters of UBS Bank are located in Basel and Zurich, Switzerland. The organization has its own offices across more than 50 different economies around the world. Its branches are positioned in the major financial sectors. The organization structure of the company is composed of one single Corporate Centre and five separate business divisions. The five major business divisions of the bank are Wealth Management America’s, Investment Bank, Global Asset Management, Retail & Corporate and Wealth Management UBS Krakow is a section of the corporate centre of the bank. The five business divisions of the bank directly deal with the customers in the market and the corporate centre tackles all the client facing activities of the five business segments. These activities are related to the field of human resource, finance, operations and information technology. SWOT Strength The bank operates in a geographically diversified scale and had 50 branches within Asia Pacific, America and Europe. The company does not solely depend on the revenue of its domestic market; approximately 40% of its annual sales are generated from the foreign branches (Cranny and Patterson “UBS CEO Says Emerging-Markets Selloff Is Overdone”). Thus the organization is shielded from adverse economic outcomes and downturns. It is a prominent bank in terms of profitability and market capitalization. Compared to its other business rivals, UBS enjoys a stronger market position because of its adequate financial reserves. It has a high capital adequacy ratio and this ratio is approximately 11% more than the potential rivals of the bank (exceeding the global average of 8%). Weaknesses The net income interest of the bank is declining over time. This indicates that some operations of the bank are inefficient and the return from its assets is declining at a steady rate. The net profit margin of UBS Bank has significantly declined after the subprime mortgage crisis. The long term financial position of the bank is not stable because its performance in the Swiss market is not adequately good. UBS Bank had taken financial aid from the government of Switzerland in 2007, 2008 and 2009 (Cranny and Patterson “UBS CEO Says Emerging-Markets Selloff Is Overdone”). Opportunities The global asset management industry is experiencing stable growth over time. In 2010, it was estimated that the asset management industry had grown up by 7.8% in the global forum. This growth has facilitated UBS Bank’s Wealth Management business (Alonso-Almeida and Rodríguez-Antón 1455-1463). By making more investments in the asset management segment, UBS Bank can experience greater revenue and profitability in the long run. On the other hand, the global investment banking industry is also growing at a steady rate. Approximately 43% of the gross revenue earned by UBS Bank is accrued from its investment banking division (Cranny and Patterson “UBS CEO Says Emerging-Markets Selloff Is Overdone”). Global growth of this industry will generate greater profitability and revenue for UBS Bank. Threats The consolidation of the global financial service industry is a threat for UBS Bank. The extent of financial market volatility and uncertainty has significantly increased in the contemporary era. Many banking and non banking financial institutions are now merging their activities for experiencing lower risks and greater market share (Alonso-Almeida and Rodríguez-Antón 1455-1463).. Thus in the near future, UBS Bank can experience threats of stronger competition from potential market rivals. Furthermore, any type of market uncertainty such as recession can substantially lower the profitability and revenue of UBS Bank in the long run. Article on UBS Bank Competency Summary Topic: UBS CEO aims to cut jobs Author: Ansuya Harjani In 13th of September 2013, the CEO of UBS Bank has declared to cut almost 10000 jobs within its workplace (Harjani “We’re half way through job cuts: UBS CEO”). The action is undertaken by the bank for lowering its operational cost in business. The bank will lower employability from its investment banking, wealth management and asset management business divisions. After the global financial crisis, UBS Bank is facing certain losses in business (Harjani “We’re half way through job cuts: UBS CEO”). The bank had previously decided to expand its business activities through its investment and wealth management functions. However it now makes strategic attempts to shift away from risky investment to wealth or private asset management sector. UBS bank will undertake more cost effective risk averse strategies in business in the long run. Thus reducing wage costs is one strategic initiative practiced by the organization for materializing its long term business level strategies. Issue Analysis The article deals with two important issues of UBS Bank’s business management system. The first issue related to workforce management and the second issue deals with risk management (Harjani “We’re half way through job cuts: UBS CEO”). Both these issues are important and significantly influence the brand value and economic surplus earned by a profit making business concern in the contemporary era. Human Resource Management Among all the factors of production, workforce or human resource management is the most crucial productive factor of a profit making concern. Land, capital and entrepreneurial activities of a company are successful only if their existing workforces are adequately productive (Woodford 203). Employees of a company are also known as human capital and possess the power to generate wealth or surplus. Giant multinational companies such as UBS Bank recruit highly skilled and knowledgeable workers. These individuals formulate and execute the innovative activities of such organizations. Thus productive and efficient workforce helps to augment the market competency of companies such as UBS Bank. However workforce management is an important business management function. The productivity and working efficiencies of employees significantly depends on their level of motivation at the respective workplaces. Motivation helps to bridge the gap between ability and willingness to work. De-motivated workers are incompetent and allocate rare organizational resources in non optimal ways (Harjani “We’re half way through job cuts: UBS CEO”). A company always faces increasing cost for the inappropriate activities conducted by the inefficient workers. Thus in order to lower cost, a company must possess highly productive workforce. However workforce of an organization can be productive, if they are motivated at work. The human resource management officials of a company must upkeep the impetus of its employees. UBS Bank Human Resource Management UBS Bank has a wide international network of business and recruits more than 60,000 workers in a global scale. The above research work has shown that the bank is facing financial crunches after the emergence of the global financial crisis. The profit margin and net interest income earned by the bank is declining at a steady rate. In order to match up the fall in revenue and profitability, the bank is trying to introduce cost cutting measures in business. In 2014, the aggregate revenue of the company has declined by 5% and it is estimated to be the worst fall since the financial crisis (Harjani “We’re half way through job cuts: UBS CEO”). UNBS Bank is introducing cost cutting instruments for experiencing greater profit margins. According to the article, just like JP Morgan, UBS Bank has also decided to lower its employments through approximately 10000 job cuts. The bank has estimated that by 2015, through this cost cutting measure it will make a net cost savings worth 1.4 billion (Harjani “We’re half way through job cuts: UBS CEO”). However this action of the UBS Bank can generate significant adverse impacts on its existing workforce. After actual materialization of such job cutting measures, the level of uncertainty within the workplaces of the bank will increase. The existing workers of the bank will panic about their own job security and this might lead to higher employee attrition rate in future. The article shows that some workers of the company are openly criticizing about the layoff rules of the organization (Harjani “We’re half way through job cuts: UBS CEO”). This can considerably lower the productivity and motivation level of its remaining employees and hence diminish the brand value of the bank in the long run. Future Recommendation In order to eradicate such problems, UBS Bank should provide greater incentives and rewards to its existing workforce. This will help to enhance the enthusiasm of the workers of the company. Furthermore, the organization can introduce additional training and knowledge building sessions for its workers for experiencing greater productivity from them. Risk Management The investment and monetary market has become highly volatile in the current epoch. Banks are subjected to higher degree of risks associated with recessions, failed investment projects and defaulting loans (Snowdon and Vane 150). However a financial institution such as a bank, cannot undertake strict risk averse policies in business. A commercial bank can experience growth in long term profit and revenue with the essence of efficient risk management system. UBS Risk Management UBS Bank is facing loss in business since the global financial crisis. It is now implementing new policies for reshaping its business position in the uncertain market. UBS investment banking division is currently focusing away from risky trading activities and concentrating in greater wealth management operations (Porter 132). The company is guaranteeing job stability of its existing workers by making them realize about the stability and strength of its asset management business. UBS owns large asset base in Switzerland, its U.S. assets are worth $ 800 billion and the value of its Asian assts is worth $ 300 billion (Harjani “We’re half way through job cuts: UBS CEO”). The bank has also decided to lower its risk by openly elaborating its secret banking rules. Future Recommendation UBS has undertaken strategic measures for lowering the risks in its business. However in the long run, it can gradually expand the scale of its investment banking operations. The bank can productively make investments in the economies experiencing stable macroeconomic conditions (Woodford 145). Work Cited Alonso-Almeida, María and José Miguel Rodríguez-Antón. "Organisational behaviour and strategies in the adoption of certified management systems: an analysis of the Spanish hotel industry." Journal of Cleaner Production 19.13 (2011): 1455-1463. Print. Cranny, Manus and Michael Patterson. “UBS CEO Says Emerging-Markets Selloff Is Overdone.” Bloomberg. Bloomberg, 4 February 2014. Web. 9 September 2014. Harjani, Ansuya. “We’re half way through job cuts: UBS CEO.” CNBC. CNBC, 13th September 2013. Web. 9 September 2014. HSC. “The International Business Cycle.” HSC. HSC, 2014. Web. 9 September 2014. Mankiw, Gregory N. and Mark P. Taylor. Microeconomics. Connecticut: Cengage Learning EMEA, 2006. Print. Porter, Michael. The National Competitive Advantage of Nations. London: The Macmillan press LTD, 2002. Print. Snowdon, Brian and Howard Vane. An Encyclopedia of Macroeconomics. Massachusetts: Edward Elgar Publishing, 2002. Print. Tucker, Irvin. B. Macroeconomics for Today. Connecticut: Cengage Learning, 2010. Print. UBS. “Our Strategy.” UBS AG. UBS, 2014. Web. 9 September 2014. Woodford, Micheal. Interest and Prices: Foundations of a theory of monetary policy. New Jersey: Princeton University Press, 2003. Print. Read More