Business Environment of Australia and New Zealand Banking Group Ltd - Example

Running head: Australia & New Zealand Banking Group Ltd Name Course name Professors’ name Date Introduction Australia & New Zealand Banking Group Ltd is one of the major banks based in Australia with branches located in Australia, New Zealand, and the Asia-Pacific. Operation in Australia mainly comprises ANZ’s business, dealing with commercial and retail banking, and funds management. In New Zealand, ANZ is the largest bank with National Bank of New Zealand. Apart from entering Asia, ANZ is rapidly infiltrating markets in different parts of the world. Company History The present state of ANZ is as a result of a merger with English, Scottish, and Australian Bank in 1970. ANZ took an international turn in 1984 when it acquired Grindlays Bank which was subsequently divested in 2000 when the bank chose to improve its presence in South Asia and Middle East. Series of acquisitions done by ANZ enabled the bank establish its strong base in Pacific. Furthermore, purchase of National Bank of New Zealand in 2003 raised the profile of the company as a top financial institution in New Zealand. Customers and Competitors Retail clients, small and medium enterprises, corporate and governments are among the major ANZ’s customers. Traditionally, the bank derived its strength from corporate lending and issuance of more than 3m credit cards. In the same vein, ANZ prides in providing a range of co-branded products in addition to loyalty programs. During the year 2010, ANZ continued to improve provision of quality services and products to customers and the community at large. This is in recognition of the fact that society and stakeholders have the greatest impact on success of a bank. In Australia, ANZ was rated as the finest bank in meeting customer needs and “domestic bank relationship.” The Institute of Finance Professionals subsequently named ANZ as a bank of the year in New Zealand. For the forth consecutive year, Dow Jones Sustainability Index assessed the bank as leading globally in sustainability issues. All these achievements are a clear reflection of commitment by staff and management to providing the best possible services and products to customers and community. While pursuing its financial responsibilities, ANZ faces competition from other major banks e. g Commonwealth Bank of Australia. Moreover, competition emanates from regional banks, and in lending, mortgage brokers and originators. Stand alone managers such as AMP, AXA and Perpetual has never cease to give ANZ a run for their money. ANZ internal environment To understand environment surrounding ANZ banking group, it is vital to study its SWOT. This is an analysis of the institution’s internal and external environments. According to SWOT, internal environment is described by strengths and weakness that faces a company. ANZ’s strengths primarily lies in high quality service brought about by divisionalization of bank to accelerate organic growth and market share. The basis is on harnessing collaboration amongst specialist businesses with a view of broadening and deepening products and services offered to customers. This approach goes further to maintain integrity and vitality of the specialization model. Specialist businesses have been clustered around customer segments. An example is personal business that serves retail customers in Australia. This business comprise of mortgages, credit cards, banking products and another personal services. Institutional business tends to handle needs of corporate and institutional customers. Other clusters formulated with a view of meeting specialized customer needs are Corporate, New Zealand, and Asia- Pacific. Additionally, customer service has been increased by ATMs and EFTPOS machines in several branches. Position in the market niche is a critical factor explaining the success and strengths of ANZ. This Australian bank is among the four top banks. It markets various merchandise to retailers, small businesses, corporate and institutional clients. With its numerous branches both locally and internationally, the company has a strong financial base in terms of returns to investment. In an article by Sireheti (2008), ANZ is committed to increase investment in fast growing economies of Asia and Pacific. The article further states bank’s dedication to modernise banking services and facilities at Solomon Islanders. On the contrary there exist a number of variables that inhibit internal operation of the company. Although equity finance grew in the beginnings, the management did not take extra caution to establish appropriate internal control (O’Shaughnessy, 2008). A discussion by May (2008) elaborates on internal weaknesses that prompt changes at ANZ. A review on ANZ’s business practice, uncovered management weaknesses and code of conduct breaches in governance and accountability within securities lending businesses. The review reveals deficiency in identification and managements of risks arising from operation of equity finance business. Management became aware of Equity Finance business when the share prices exposed threadbare security levels (Jury, 2008). To curb the weaknesses, ANZ conducted a staff replacement with Asian-Pacific Managing Director Alex appointed to manage institutional division. ANZ External environment This external environment is explained by opportunities and threats operating in the company. The ANZ banking group CEO is now considering expansion opportunities in Asia and goes further to encourage Australians to make similar consideration despite recent Global Financial Crisis. Mr Smith who joined ANZ in 2007 visualises 20% revenue generated in Asia by the year 2012. In a publication by Lending Central Team (2009), the CEO acknowledged that an estimated income of 20% may take long to be realised simply because of Global Financial Crisis. ANZ is also looking into the possibility of streamlining its role in superannuation by utilising OnePath restructure instead of ING (Darin, 2010). The re-brand to OnePath will see wealth group of ANZ operate as a single unit consequently bringing together ANZ investment lending business, ETrade, ANZ financial planning, ANZ private bank in addition to insurance activities and products and services which are currently being offered under ING Australian banner. This is therefore an opportunity to merge functions. External environment is also described by threats comprising of competition from other financial institutions. Industrial regulations, customer preferences, diversifications of products and services affect competition. When financial services in Australia and New Zealand changed, competition was brought to another level with non-banks coming in to offer similar products and services. Originally, mortgages and credit were offered by banks but now also offered by non-banks. This is an expanding competition for customers which have the ultimate effect of reducing net interest margins while driving up advertisement and promotion expenses. Exchange rates have been fluctuating and are posing as a threat to ANZ. Appreciating Australian or New Zealand dollar affects negatively exports and international tourism. At the same time, depreciating value of New Zealand dollar against Australian dollar has adverse effects on ANZ national bank limited. In terms of economics, the recent Global Financial Crisis dislocated banks credit and equity capital markets therefore leading to shrinkage in economic activity. Emergence of Information communication technology has seen banks participate in internet banking. Spyware and Adwares, virus and worms, Phishing, and Trojans are just a few examples of threats to this innovative internet banking. To protect transactions and personal information, ANZ employs various security measures. The bank advises its customers to exercise caution when giving out their personal details to unknown elements and to change their internet bank passwords more often. ANZ Differentiating Factor as a Business Strategy Asian Growth strategy is a key differentiating factor in ANZ bank. It is important to observe that ANZ utilizes two-pronged strategy which involves partnering with local retail financial services markets in addition to operating via a network of local branches and offices. The network covers numerous areas of trade and finance. Furthermore, ANZ assumes a portfolio approach to investment in Asia that has the effect of minimising risk to individual investment. The differentiated growth strategy is now even making more sense in the Post-Global Financial Crisis where Asia, apart from Japan, assumed 8% growth whilst developed markets such as United States and Europe grew at a lower rate of 2.5%. ANZ’s investment in Asia gives shareholders a material exposure to world leading economies. In support of Asia investment, ANZ has gone further to build a world-class team made up of experienced bankers who will take advantage of growth opportunities and subsequently deliver on company’s differentiation strategy. Over the past five years, ANZ focused on enhancing operation in New Zealand and Australia with special attention placed on personal banking operation that takes care of consumer sector. For that reason, major investment has been made in branch network and distribution systems. To supplement provision of services, more staff has been recruited in these networks. As mentioned earlier, ANZ undertook a monitored expansion into Asia while establish small investments in China, Cambodian, Indonesia, Laos, Malaysia, and Guam. Operations in Asia were expected to contribute approximately 20% of ANZ’s earnings by the year 2012. Human Resources Strategy In a nutshell, human resources within ANZ support the objective of working with individuals, teams, and the institution so as to deliver excellent performance, enhance capabilities for growth, and create a climate led by unique values. ANZ’s “perform, grow and breakout” strategy was implemented in the year 2000 with a view of transforming the organization into a culturally diverse institution. The breakout team mainly focused on achieving cultural transformation designed to create a culture driven by performance. This will allow the organization differentiate itself in a market. In terms of talent management, ANZ has a rigorous process of identifying, assessing and developing talent. Another Human Resources Strategy within ANZ is to establish good atmosphere that enables employees discharge their duties excellently in a people friendly environment. Health, Safety and Wellness team was mandated to direct implementation of this strategy. Diversity team worked on creating an inclusive workplace where personal differences such as gender, age, culture, disability, and lifestyle were considered for both individual and organizational success. With respect to remuneration and rewards, ANZ has a strategy that responds to individual performance. Human Resources Management Practises Susie Babani, the Group Human Resources Managing Director, joined ANZ in 2007. According to ANZ website, www.anz.com, he plays a critical role in delivering innovative strategies, programs and policies that supports employment and development of employees globally. The manager ensures that ANZ has the right manpower capable of delivering super regional strategies. ANZ offers both full and part time opportunities. The organization is committed to recruiting and retaining talented individuals in all operational areas. This bank distinguishes that skills and experience comes in different forms thus seek interested applications from various individuals and groups (Armstrong, 2001). With a view of capturing new college graduates, ANZ formulated graduate program to attract, develop, and retain talented individuals who have a focus of taking up challenging career opportunities in the banking and finance industry. In a message from Susie Babani, he explains the company’s intention of providing quality business to world wide customers especially in Australia, New Zealand and Asia- Pacific. To realise such a vision, Susie elaborates that they need to develop great people who will deliver their best. Apart from competitive remunerations and benefits, the company provide learning and development opportunities to interested individuals. As a strategic measure, ANZ rewards handsomely persons who outperform and deliver great results. While noting that diversity of ideas and experience is an essential ingredient to success, ANZ recruits talent from any part of the world. In terms of culture, ANZ banking group is diverse with employees born in more than 130 countries and speaking various languages. To balance between work and life, the institution has the following options: flexible working hours, roaming work, part-time work, career breaks or even extension, study leave and lifestyle. A study by Lewis (2007) indicates that flexible work practises plays a critical role in reducing staff turnover and absenteeism while improving employee productivity and customer service relationship. Recently, ANZ received recognition as a mature institution providing equal opportunity for women and persons with disabilities. Recommendation In response to globalization, ANZ should strive to infiltrate African countries where resources remain unexploited. Banks in Sub-Saharan Africa are known to offer their credits with high repayment interest rates. If ANZ formulates a product that protects welfare of an African consumer, it would be able to penetrate growing economies. Additionally, ANZ ought to cultivate a policy where it brings changes instead of following changes brought about by other competitors. Investment like Microsoft Inc and Etihad Airways succeeded following its ability to bring change and not adopt to change. This is a route that ANZ bank should follow. Conclusion In conclusion this report gave an explicit analysis of ANZ banking group, based in Australia. It was apparent that SWOT is an analysis tool used to explain both the internal and external environment of a business. The strength of ANZ mainly lies in divisionalization that gives rise to quality customer care service. Its position both locally and internationally is another source of strength for ANZ banking group. On the contrary, internal control system in security lending business is an inhibiting factor. Nonetheless, necessary steps have been taken to rectify the situation. Externally, the institution faces several business opportunities in Asia- Pacific such that if exploited well, it would raise status of the company to a world class level. A major threat to ANZ business is the increasing competition especially from Commonwealth Bank of Australia. Finally, in recognition of workforce as a critical stakeholder, the paper gave a vivid discussion covering human resource strategies and practises. Read More