The Banking of Ireland - Assignment Example

3.0 Introduction The banking of Ireland was established under the Royal Charter in 1783. The major players in the industry include the Allied IrelandBank and the Bank of Ireland which are publicly owned. The banking industry is one of the major contributors to the Irish economy. In 1998, the bank contributed about 3.5% of the total government revenue (Best, 2012). In the state, the bank is one of the largest employer providing more than 30,000 jobs to the people living in Ireland. The banks offer the traditional intermediation functions, money transmission services and other specific services, for example, life insurance services. Internationally, the profitability of the traditional banking activities has been declining on the past few years. This has been accompanied with massive growth in the financial market owing to globalization of the market, increasing innovation and technology, abundance of new financial products and adoption of enhanced risk management strategies. These developments have enabled the international financial industry to experience immense growth even in the face of decline in the traditional services profits. The Bank of Ireland Finance (BIF) offers various finance packages for its clients. The introduction of the motor finance service by the bank has greatly contributed to its growth. This product is not regulated by the central bank policies allowing for the bank to be flexible. The Irish economy has experienced tremendous growth for the past 15 years. This has created an opportunity for the banking industry to offer improved services and products to the market. The motor finance service is a product by the bank that lends money to their clients to pay for their motor vehicles. This product offers the client the advantage of acquiring the vehicle without liquid cash. They are thus able to repay the loan in installments at an interest. The innovation of such services has lead to the development and growth of the banking industry in Ireland. The banking industry has undergone tremendous growth with the globalization of the market. The formation of the European Union market for the banking sector has increased competition in the market. Furthermore, other lending firms in Ireland have come up increasing the competition facing the bank of Ireland. The increased competition is accompanied by a change in the consumer needs. This has prompted the banks to offer other services in order to retain it market position (Best, 2012). However, this industry has been facing various challenges facing some of the banks to close down. The recent Irish banking crisis has significantly affected the functioning of the banks. SWOT Analysis Strength BIF has reported an increase in the number of deposits as well as revenue from lending following the introduction of the motor car financing. The ability of the institution to form contracts with different motor vehicle franchise is also strength for BIF. This is because it is able to offer the clients diversity in terms of the type of motor vehicle. Currently, the motor vehicle loaning service offered by BIF is not regulated by the government. This offers the bank flexibility in satisfying the client. It also helps reduce the limitations and expenses attributed to the implementation of the government policies. Weakness One of BIF’s weaknesses is its inability to ascertain risk. The bank failed to foresee the challenges that the economic financial crises which led to the collapse of housing and related investment market (Valentin, 2001). During the Irish economic crisis, BIF was unable to forecast the aftermath of the crisis leading to massive loss. Although the motor finance product offers a flexibility advantage, lack of central bank control may also be a point of weakness for the bank. A further reduction in the company’s stock price market has greatly influenced the current financial position of the institution. Opportunity Currently, the organization is confronted with various opportunities, which include the opportunity to expand across the European Union market. The opening of the Irish economy to the global market has presented various opportunities to the financial industries in Ireland. BIF has the opportunity to expand and provide its services in the global market. The competition that accrues from the globalization of the market is also an opportunity for the bank to capitalize on the international market thus getting out of the current domestic economic crisis. During the economic crisis, BIF capital investments in the foreign market may act as a buffer prior to recovery of the domestic market (Valentin, 2001).. Globalization also offers the organization the opportunity to develop new innovation in service delivery, products and management so as to compete effectively in the market. This leads to growth and development of the company. BIF is expected to experience various threats in its operation. Following the financial crisis, the banking institution sought the government funding in order to finance their operation. This means that the government will increase the regulation and scrutiny of the finance institution to ensure that the crisis does not recur (Valentin, 2001). The globalization of the Irish economy will be characterized by decreased revenue for the institution. This is due to the reduced number of depositors as well as competitive interest rates in the market. External Market PESTEL PESTEL analysis of the banking industry involves the analysis of the Political, Social, Technological, Economic, Environmental and Legal factors affecting the finance institution. This is an essential tool in analyzing the firm’s growth and economic position by an outward look on the external environment. It involves the analysis of the market in relation to the political, social, economic, legal and technological factors (Valentin, 2001). For many years, the UK has experienced peace within the country as well as the states in the kingdom. There was an upward growth in the economy of Ireland before 2008. This was greatly been attributed to the increase in international trade of goods due to the globalization of markets. However, Ireland experienced a significant economic crunch from the year 2008 to 2010. During this period, the economy began a sharp fall. However, the economy is beginning to grow. The growth is expected to pick up by 1.9% by the end of 2012. This is promising to BIF and other investors. This will influence the sales and positively alter the market. Ireland has an increased capacity for growth. This is attributed to the open economy and human capital. These factors will favor BIF activities within the country. However, Ireland has a looming sovereign debt after the economic crunch. This might constraint the activities of BIF and other motor finance institution. In the political factors, Ireland has enjoyed tranquility. Therefore, Ireland has low levels of political risk with regards to the motor finance industry. The legal system in Ireland is adequate, and there are no international tensions. Its diplomatic ties have been strengthened. The government has made an attempt to provide effective and appropriate economic policies that will favor the motor finance industry. The globalization of the market has contributed to the access of technology from various motor vehicle industries. This has enabled the firm to purchase a diverse form of the technology from the various sources. With regards to Social factors, several aspects are put into consideration. BIF can increase the consumer confidence if it can avail low cost capital for its customers. 7.1 Recruitment and Selection Factors to consider Selection and attracting new sales personnel is a paramount aspect with regards to a sales job manager. The initial step involves sales job analysis. All the sales jobs have distinct characteristics. The sales personnel are required to initiate their own decision for executing their individual activities within BIF in relation to their targets. Most of the sales personnel have few opportunities in which they interact with their supervisors; hence, they receive instructions or provide feedback through fax or telephone. Another imperative aspect of this job is monotony; therefore, same work is done repetitively. The sales job may create a tendency for discouragement if the customers are unhappy with the products of BIF. Each of these characteristics has significant implications in the recruitment and selection; hence, they need consideration. The job specifications should then be decided accordingly. Job analysis pertains to identification of job duties, objectives and responsibility; analysis of the conditions of working; the position in the company’s hierarchy and performance norms. Job analysis will help in arriving at a job description; this means, identification of various activities to be performed. It also helps in identification of the individual characteristics and qualifications in relation to the job: job specifications. A comprehensive account of the basic responsibility of the salesperson will assist in the identification of qualifications and individual characteristics needed. Recruitment BIF should determine the kind and number of salespersons required. Recruitment refers to all the activities involved in application securing for the sales job position. The job application form should be tailor made with regards to the specifications of the job. It should provide the applicant with the chance to issue information about ones capabilities. The amount and type of information required in the application form is governed by several factors. The company may want to duplicate the questions asked so as to check for honesty. The nature of the job will also influence the questions asked. The degree to which the recruitment function is centralized is also another factor. BIF should prepare its own formal applications and seek out the following information; personal background of the applicant, education and the employment record. If BIF wants to hire a salesperson from other companies, it should seek out why the person wants to change jobs. Hiring of salesperson from competitor companies is not advisable; since they may have questionable loyalty. Internal transfers are good avenues of job recruitment. This is because they are familiar with the company’s policies, objectives and programmes. It will also improve their morale. Selection This will be done after the applications have been received. BIF should process the applicants and select the individuals that fit best in the needs of the company. The company should have a system that measures the applicants against the requirements. The selection system should consist of a set of consecutive screens in which the applicants may be dropped off from further consideration. A suggested seven step process of selection includes. Preliminary interview; Formal application; Interview; References; Psychological tests; Physical examination; Employment offer. The selection system should fit the budgetary limitations and information needs of the company. Interviews should seek out general appearance, conversational ability and certain behavioral aspects. The interview should serve as a two process of communication. 7.2 Motivation and training Motivation It is the process of getting the company employees to work en route for achievement of an objective. It should help the company win sales force commitment to the company. Non-financial incentives are an imperative component of the Company’s motivation mix. Some of these factors are as follows. The company should seek meetings between its sales team and the managers. These meetings are highly regarded in the motivation of the sales team. These meetings will allow managers to comprehend the needs, personality and problems of each sales person. The managers can then comprehend any source of frustrations and demotivation in each salesperson and respond accordingly. There should be job clarity. When the objectives are well defined, quantified and linked with recognition and reward, serve as motivation to the sales person. BIF should develop sales quotas or targets that are attainable, but offer a challenge to the sales person. Sales contests are another important tool that the company should consider utilizing. It provides an avenue to show better performance; therefore, secure satisfactory results. BIF should also conduct sales conferences and conventions. This will provide the salesperson with the opportunity to gain social satisfaction and air their views on matters that affect their work. Abraham Maslow describes the importance of attainment of social needs, as an important factor for motivation achievement. It is vital that the BIF leadership be inspirational. BIF should also have means of extending honor and recognition to their sales person; such as, salesperson of the year or month award. Offering membership to social clubs, sales trophies, certificates should also be considered as a means for recognition and reward. The final but the most widely utilized are financial incentives. Pyramid showing motivation hierarchy Training Training programme for the salesperson is essential for proper functioning of BIF. In order to come with a training program, it is essential to put into consideration the learning styles each salesperson. The dominant learning styles include the activist, reflector, theorist and pragmatist. The planning of these programmes must be comprehensive so as to ensure effectiveness. The company should provide self learning modules. In these, the participants are issued with course materials that they should study. Audio and video cassettes and written notes can be issued. This is essential when the company wants the salesperson to revise some materials. The pitfall to this modality is that there is no feedback or means of assessing whether the material has been studied. Class room training should be carried out. These should be based on pre-decided objectives. The following areas can be covered; product information, company knowledge and marketing strategies for the company services or product. The participants can also be taught on ways of identifying customer needs, ways of obtaining interviews with prospective customers and ways of answering objections. The participants can also be taught on closing sales deals and matters of planning and time management. This will add knowledge with regards to motor finance services. Another strategy that can be utilized is on the job training for BIF salesperson (Kotler & Gary, 1999). This is imperative as it demonstrates real life situation in the selling of motor finance services to customers. The trainer can make the sales call themselves or as the participant learns and observes. The trainer can then observe as the salesperson sells, and then issue feedback and recommendations. Training programme The trainer identified for the job must possess several key skills. The trainer must have a thorough knowledge of motor finance industry and practice. The trainer must have the ability to relate to the situations experienced by the salesperson. A good trainer should identify the training needs of the salesperson. The trainer should comprehend what makes people to learn new things in the motor finance industry. The trainer should ensure participation of the participants. Methods that should be employed to ensure participation include discussion groups, decision making exercises, questions and answer periods, case studies and demonstrations. Training follow up should then be conducted immediately after the training. Analysis and measuring of results with regards to job performance should be done. 7.3 Sales force organization and compensation Sales force organization The structure and organization of BIF is dictated by the company’s size, culture, the products sold and the compensation. The present organization system should be reviewed. Areas of potential loop holes should be identified. Proper organization of the sales force of BIF is cardinal in the success of the company. The organization structure of the company should be formal (Dalrymple & William, 1998). It should have multiple levels of management. In these levels, the sales force is arranged in a hierarchical manner. Command lines follow these levels. The one in the lower cadre reports to the one above, and so forth. However, the organization should provide provisions for the bypass of this chain of command. The overall manager should be able to communicate to those in lower cadres. This will help in the identification of problems or complains that might be encountered due to such “red tapes”. In the organization, the job specification should be clearly laid out. The responsibilities should be comprehensively stipulated. This will enable improved company performance(Dalrymple & William, 1998). Compensation Compensation can be direct or indirect. Direct compensation comprises the basic salary and allowances that cover other expenses. The basic salary should be revised from time to time and should increase with promotion. Indirect compensation can be financial or non-financial. There are several factors that should be considered when designing a compensation package. One of these factors is the relation to the product life cycle. In BIF, the life cycle is at “firmly established” position. Apart form the basic salary, indirect benefits are a requirement at this stage. These include training programmes; promotion to a responsible position and foreign trips for understanding the motor finance market. These will serve to increase the knowledge of the salesperson and lend a novel direction of viewing things. Reference List Dalrymple, J., and William L., 1998, Sales Management: Concepts and Cases. 6th ed. New York, NY: John Wiley and Sons. Hughes, G., and Charles, H., 1999, Sales Management: A Career Path Approach. Cincinnati, OH: South-Western College Publishing. Kotler, Philip, and Gary, A., 1999, Principles of Marketing. 9th ed. Upper Saddle River, NJ: Prentice Hall. Best, R., 2012. Market based management. NJ: Prentice Hall. Valentin, 2001).. Fundamentals of market research. California: Sage. Philip, W., 2004. A knowledge base representing Porter’s Five Forces model. Journal of General Management, 124(3), p.5. Valentin, K., 2001. SWOT analysis from a resource based view. Journal of Marketing Theory and Practise, 9(2), p.122. Read More