StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Strategic Analysis of Customers Limited - Essay Example

Cite this document
Summary
This paper "Strategic Analysis of Customers Limited " is being carried out to evaluate and present a strategic analysis of an Australian Stock Exchange (ASX) listed company called Customers Limited (ASX: CUS). It has acquired many existing ATM networks. …
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER97.7% of users find it useful
Strategic Analysis of Customers Limited
Read Text Preview

Extract of sample "Strategic Analysis of Customers Limited"

S LIMITED Strategic Analysis Report Content I). Profile: s Limited is an Australian company engaged in the business ofproviding ATMs and Electronic Payment Systems. It has its head office at Sydney. It got listed in the Australian Stock Exchange & its stock is CUS (ASX: CUS). The company believes on inorganic growth and has given shape to various successful acquisitions. It has acquired many existing ATM networks. One of the important acquisitions has been of acquiring of St George Bank’s Merchant ATM network in January 2005 which was a 700 numbers strong network. On April 2007 it acquired ATM Solutions Australia Pty Ltd. and was an important stride in its path of acquisitions. It has more than 5000 ATMs under its name and has a bigger fleet than any individual bank. Following this acquisition the company formed a subsidiary known as Customers ATM Pty Ltd. (Customers ATM). On the ‘Processing’ business vertical, the company has a joint venture with Bendigo bank & MasterCard and the entity is known as ‘Strategic Payments Services Pty Limited.’ In September 2006 the company got into a joint venture with FCP Brencorp Ltd. to form ‘Customers Asia Limited’. The company has 3 main focus areas: ‘Customers ATM’ focuses on Australia & New Zealand. ‘Strategic payments Services’ on Payments processing. ‘Customers Asia’ on International expansion.   The company is also looking at opportunities in Asia and especially in emerging economies like China & India, which have a huge market for ATMS and also offer great potential in terms of future growth (Shareholder letter).  1. (II). Financial (all figures in $’000) performance: From the FY08 interim financial results we see that there has been a quantum leap in revenue from $15,695 in 2006 to $ 41,548 in 2007. EBITDA (Earnings before interest, taxes, depreciation and amortization have again increased more than double in the same period, from $2,462 in 2006 to $5,252 in 2007. NPBT (Net profit before tax) over the same period has had a stupendous growth from a mere $655 in 2006 to $ 29,037 in 2007. But in 2008 revenue has declined by -3.7% to $40 million. Whereas we see, EBITDA has had a positive growth of +21.8%. The main reason behind this almost 22% rise were closing of the Sydney office & cost saving initiatives. Cost saving is important especially in view of the current economic slowdown in the world economy. (Investor Presentation and Business Update) (Half Year Report Period ending 31 December 2008) 2. (I).PESTEL Analysis:   Political: There is a political dynamics playing in the user charges category of ATMs, overseen by the industry players. They have bilateral agreements between themselves to facilitate use of each others ATMs by each others customers. But they charge the customers an ‘interchange fee’ and also ‘foreign fee’, which are often found to be higher than actually warranted. But the politics within the industry by the participants ensure that this regime continues and no reform takes place. But not paying any heed to this RBA has gone for regulatory charges and has initiated the era of ‘direct charge’. Economical: Australia is a democratic country with a strong economy. GDP at current prices for the year 2007 stood at US$ 945,674 (million) (United Nation Statistics). Customers limited functions in a stable economic background. Its main competitors are banks & other electronic payment service providers. There are many networks of ATMS in Australia. Big Banks control the major portion of the networks. Sub-networks also exist there, which were built by housing societies & these are linked with smaller institutional ATMs thus making it possible for the smaller ones to access the larger ATM networks. There are also independent entities that have set up ATMS & they control a little more than 13000 ATMs in the country. Currently ATMs in Australia amount to 26’500. All these ATMS are interconnected under certain bilateral legal agreements. This makes it possible for the consumers from all across the networks to use all the machines. For this ‘interchange charges’ were there which on an average stands around $1.0 for every transaction (Reserve Bank of Australia). Though it has been marked that the biggest 4 banks have been charging $2 as ‘foreign fee’ to the consumer, if she had used a card belonging to a different financial house. But the customers are unhappy with the regime. Some of the biggest banks of Australia like ‘Commonwealth bank’, ‘National Australia bank’, ‘ANZ bank’, give very big competition to Customers Ltd. As they control a big fleet of ATMs. While ‘First Data International’, specializes in payment services and e-commerce & has even bigger number of ATMs than Customers Ltd. (Shareholder letter April 2007) Social: The interchange charges and ‘foreign fee’ has been a matter of contention in the use of ATMs and the RBA or the Reserve bank has also felt that there is a need of reforming it. The amount has remained fixed over a period of time and RBA thinks this is due to lack of competition. In the reformed regime, card holders would be given a choice on screen before with the amount being charged to them as interchange fee and will be given an option of whether to proceed or not with the transaction. This is a much transparent process but the society and consumers have reacted quite strangely to this. Customers Ltd has reported a fall of 12% in ATM uses since the reform on March 3rd 2009, as many consumers after watching clearly on the ATM screen the fee they are being charged, withdraw from the transaction and prefer not using the ATM rather. (The Australian) . The new direct charging regime, though endorsed by the RBA has not been a hit with the society. Technological: Customers Ltd. has invested in large amounts in latest ATM technology & has positioned itself as the most efficient deployer of ATMs across the nation. In tandem with the march 3rd’09 RBA reforms, it has made its ATMs technologically ‘direct charges’ ready. (The Sydney Morning Herald). Environmental: The economic environment of the company comprises of some of the biggest banks of Australia viz : ‘Commonwealth bank’, ‘National Australia bank’, ‘ANZ bank’ and they are its prime competitor also in terms of no. of ATMs. But Customers Ltd. Has larger no. of ATMs than these individual banks only it is second to ‘First Data International’ (Investor Presentation and Business Update). Legal: The Reserve Bank of Australia (RBA) along with the Australian Payments Clearing Association (APCA) looks after the regulatory environment for ATMs &other modes of electronic payment or money transaction. As mentioned above, there are bilateral agreements between networks of ATM and interchange fees structure were negotiated at the time of the agreement itself, leaving little room for renegotiation. This also led to lack of competition and RBA inferred that there was a need for reforming this system. Under RBA’s regulatory patronage and guidance, from march 3rd’09, the new ‘direct charge’ ATM fee era was ushered in. 2. (II). Five (5) Forces Analysis: Supplier Power: There are many big players in this industry & some of the biggest banks (mention before) are Customers Ltd.’s competition. The suppliers of ATMs charged ‘foreign fee’ & ‘interchange charge’, sometimes more than what is warranted by the actual cost they were bearing. Buyer Power: Often in remote places consumers do not find their own financial institution’s ATMs, they have to resort to using other (foreign) ATM & have to pay ‘foreign or interchange charges’. They did not have much power until recently, but after march 3rd’09 according to new RBA guidelines they at least have the option of not going through with the transaction under ‘direct charges’ regime. Substitutes: Switching to substitutes might not be easy with the consumer holding accounts in one bank but competition will increase under the ‘direct charge’ regime and the consumer will get the benefit of greater choices at competitive prices. Barriers to entry: The prevailing ‘bilateral agreements’ (mentioned above), makes it difficult for new entrants in the industry to get proper admission into it. It was a burdensome process for the new entrant to negotiate with the existing players on matters like ‘interchange charge’ (when it existed), different technological & business details and often they have to do so from a position of weakness, being new players. Degree of Rivalry: Rivalry pushes the service providers to offer differentiated products. For example CUS specializes in customizing the ATMs according to need and helps in leveraging it in terms of additional advertising revenue. Moreover from March 3rd onwards players who provide the lowest rate will win consumers towards their ATMs. So a brand loyalty will develop in near future 3. References: ‘Shareholder letter (April 2007)’, retrieved on March 31, 2009 from http://www.customers.com.au/downloads/asx_releases/2007/shareholderletter_april07.pdf  Estimates of GDP at current prices in US Dollars (in Million), September 2008, retrieved on March 31, 2009 from http://unstats.un.org/unsd/snaama/resultsGDP.asp?Disp=Million&RCode=&CCode=36&Series=2&Year=2003%2C2004%2C2005%2C2006%2C2007&SLevel=0&Selection=quick&x=27&y=10   An access regime for the ATM system – February 2009, retrieved on March 31, 2009 from http://www.rba.gov.au/PaymentsSystem/Reforms/ATM/ATMAccessRegime/atm_sys_need_reform.html Boreham T., (March 2009), ATM users vote with feet on new fees, retrieved on March 31, 2009 from http://www.theaustralian.news.com.au/business/story/0,28124,25191682-20501,00.html Customers Limited goes live with ATM direct charging, March 2009, retrieved on March 31, 2009 from http://newsstore.smh.com.au/apps/previewDocument.ac?docID=GCA00933189CUS Investor presentation & business update, 2008, retrieved on March 31, 2009 from http://newsstore.smh.com.au/apps/previewDocument.ac?docID=GCA00821537CUS&f=pdf Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Strategic Analysis on an Australian Stock Exchange (ASX) listed Essay”, n.d.)
Strategic Analysis on an Australian Stock Exchange (ASX) listed Essay. Retrieved from https://studentshare.org/miscellaneous/1553324-strategic-analysis-on-an-australian-stock-exchange-asx-listed-company-called-customers-limited-asxcus
(Strategic Analysis on an Australian Stock Exchange (ASX) Listed Essay)
Strategic Analysis on an Australian Stock Exchange (ASX) Listed Essay. https://studentshare.org/miscellaneous/1553324-strategic-analysis-on-an-australian-stock-exchange-asx-listed-company-called-customers-limited-asxcus.
“Strategic Analysis on an Australian Stock Exchange (ASX) Listed Essay”, n.d. https://studentshare.org/miscellaneous/1553324-strategic-analysis-on-an-australian-stock-exchange-asx-listed-company-called-customers-limited-asxcus.
  • Cited: 0 times

CHECK THESE SAMPLES OF Strategic Analysis of Customers Limited

Strategic Marketing

Understanding the company's operating environment in this way can help the small business owner to formulate an effective strategy, position the company for success, and make the most efficient use of the limited resources of the small business.... Running head: Strategic Marketing Strategic Marketing Insert Name Insert Grade Course Insert 19 December 2011 Strategic Marketing Introduction Marketing is an activity of promoting, creating, and delivering goods and services to customers and businesses....
4 Pages (1000 words) Essay

Radio Shack Strategic Management

strategic issues There are two major strategic management problems facing RadioShack Corporation: merchandise mix and growth strategy.... RadioShack Corporation is a leading US retailer of consumer electronics goods and services which includes mobile technology products and services, as well as products related to personal and home technology and power supply needs....
15 Pages (3750 words) Research Paper

Supply Chain, Strategy and Customer Closeness

SCM enables the company to cut costs and look for ways to satisfy customers.... Organizations keep constant contact with customers, looking for ways to satisfy their needs and wants.... o get closer to the customers, businesses have to work as cohesive organizations, using tools and technology (Gulati and Holroyd, 2005, p.... dentifying and working out to strengthen customer satisfaction, supply chains can help in having a good relationship with customers, but supply chains have two attributes which are cost and service....
10 Pages (2500 words) Essay

The Key Strategic Decision of McDonalds

The company implemented various promotional plans in order to increase the competency of the company (McDonald's Restaurants limited, 2008).... The company presently serves more than 64 million customers on a daily basis.... cDonald's adopted the theory of expansion to offer customers highly efficient services.... The focus of this paper "The Key strategic Decision of McDonald's" is on one of the leading fast-food restaurant chains in the world founded by Ray Kroc in the 1940s....
5 Pages (1250 words) Essay

Strategic Marketing Planning as an Essential Marketing Tool

It results in the positive perception of customers regarding the quality of services the company rendered.... arketing planning is essential for business establishments that aim to gain competitive advantage, which is limited to establish a brand, build, defend, and maintain.... Thus, this strategy is limited to customers who are willing to pay despite the higher price.... The product or service is designed based on the customers' wants; hence, it produces satisfaction....
6 Pages (1500 words) Essay

Sanitex Limited - Marketing Research and Competitor Analysi

The paper "Sanitex limited - Marketing Research and Competitor Analysis" argues it is crucial on Sanitex limited part to understand the issue about customer behavior and its competitive environment.... Sanitas limited, a company offering pest control services is eventually a growing company in West London.... Griffins has a limited idea about customer behavior so he needs professional advice from a marketing manager especially on the customer's buying process, buying behavior, and competitive environment....
5 Pages (1250 words) Research Paper

McDonalds ustomer Satisfaction Strategies

The behavioural dimension refers to repeat purchases and attitudinal perspective refers to customers' intention to repurchase and recommend the product to others.... These outcomes are predominantly uppermost throughout this analysis so that even in the absence of metrics that enable the researcher to measure them (outcomes), the analytical depth of the research effort would remain intact and sound.... The theoretical and conceptual framework of this research effort would be basically determined by the relevance of the existing theoretical postulates and the conceptual frameworks of analysis and reference....
12 Pages (3000 words) Research Paper

Predicting Customer Behavior Using Statistical Techniques

For many years data mining had been useful only to a limited audience that had prerequisite expertise in math and statistics.... Predictive analysis solutions have evoked significant interest from retail organizations in the recent past, though their application at the organizational level is still limited.... This paper explores predictive analysis tools that can enable retailers to identify variables that are likely to have a substantial impact on customer behavior and overall business performance....
14 Pages (3500 words)
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us