POGO8111 Leadership and Organisational : National Australia Bank

Conduct an external and internal organisational analysis of the National Australia Bank, incorporating Porters Five Force strategy.

Building on that analysis conduct a comprehensive analysis of the organisation's business ethics, social responsibility and environmental sustainability including a scoping exercise of all relevant stakeholders.

Michael Porter 2008 the five competitive forces that shape strategy

Thompson, Strickland and Gamble 2015 Crafting and executing strategy: Concepts and readings

Miller Eisenstat & Foote 2002 Strategy from the inside out: Building capabiltiy creating organisations

Jacobides & MacDugffle 2013 How to drive value your way

Pringle & Kroll 1997 Why trafalgar was won before it was fought: Lessons from resource-based theory

Introduction

The purpose of the following paper is to describe the different internal and external environments of National Australia Bank. These are very important to discuss because the operations of the entire organization depends on this. This bank has been one of the best serving banks in Australia (Nab.com.au, 2017). They are considered as one of the four biggest financial organizations in the country. An organizational analysis will positively determine the areas they have focused and how this will impact on the operations of the organization. The social responsibilities they perform are also essential to increase their brand reputation. All these issues will be discussed in this paper. Other areas like the role of the stakeholders in their operations will be described as well. In this process, one would be aware of the things that this organization does to please its customers and satisfy their needs.

External environment

Porter’s five forces strategy

Porter’s five forces strategy is one of the most significant tools to determine its working arenas and what things they need to improve (Dobbs, 2014).

Threats of new entrants

It is assumed the new entrants in the banking industry will bring innovation and they will serve the customers in a better way by using the technologies. They will use the lower pricing strategies, cost reduction strategies and to provide newer value propositions to the customers. National Australia Bank will have to face these challenges and back themselves up to retain their competitive advantage (Barney, 2014).  They can opt to innovate new products and services at a lower cost to the customers and attract new customers at their disposal. They have to lower the fixed cost per unit as well (Dobbs, 2014).

Supplier bargaining power 

Most companies in the banking industry buy their raw materials from several suppliers. If the other banks get their materials from the dominating suppliers, the profit margin of NAB will surely decrease. This is why the higher supplier bargaining power always brings down the total profits of the bank. (Dobbs, 2014).NAB should build up a strong supply chain with the multiple suppliers to increase their profitability. They can experiment with multiple product designs to use the different materials. Once the price of one material increases, NAB can opt to shift to another material of other suppliers.

Buyer bargaining power

The buyers always demand a lot and the banks have to provide them with the proficient services. They want to avail those prices by paying the lowest costs as possible. This will hamper the overall profitability for NAB on the long term period. If the customer base is smaller for NAB, they will need to increase their offer services because the bargaining power of the buyers would increase. NAB should focus on building a large customer base that they can manipulate in a large way (Dana, 2012).  They should aim to innovate new products or services rapidly to avoid the increasing demands of the customers.

Threats of substitute products

If a new product is launched and it meets the needs of the customers in other ways, the profitability of the industry will suffer a lot. This is why the threat of the substitute products can be considered as high if the value proposition offered by the other companies can be considered more unique than NAB. NAB should be looking to operate more with a service oriented approach than the product oriented approach. The switching cost for the customers should be increased. They should try to understanding the core need of the customers rather what the customer wants is buying (Dobbs, 2014).

Rivalry among industry competitors

If the competition between the organizations in an industry increases, the total profitability of the industry will fall down as the prices of the products and services will go down. The banking industry is quite a competitive one in which NAB operates. Nab sjould look to build a sustainable differentiation strategy. They have to upgrade their scale so they can compete better with their rivals. They can also collaborate with the competitors so they can increase the market share and also increase the growth percentage as well (Dobbs, 2014).

Internal environment

The internal environmental analysis of the NAB can be done only when the strengths, weaknesses, opportunities and threats can be identified (Hollensen, 2015). 

Strengths

• NAB has a strong brand name.
• The financial position of NAB is quite good as well.
• Their revenue is alarming and they earn a good amount of money from the interests.
• They have diverse set of products and this is why they are considered as the leading financial products.
• As per the assets, NAB is considered as the largest bank in Australia.

Weaknesses

• They have very little or no global acclaim indeed.
• Their revenues have been declined that has affected the development of NAB.

Opportunities

• NAB can opt to expand in other countries (Claessens & Horen, 2014).
• They can offer diversified portfolios for the customers.
• They can open a new asset management sector.

Threats

• The changing government regulations and policies will affect the business operations of NAB.
• The recessions in global sphere has hampered their growth as well.
• Strong competitors like BNP Paribas, Commonwealth Bank, Standard Chartered Bank and others have pushed the limit of the competition.

Business ethics of NAB

The business ethics and the codes of conduct will have to be maintained by the employees strictly. These ethics have to be maintained to retain the sustainability of the company (Crane & Matten, 2016).  If any rules or regulations are violated by the employees (permanent or temporary) they will be punished according the extent of the violation. The other employees should report these things. All the policies of NAB should be followed by the employees with strict measures. Any undesirable business conduct should be dealt with utter strictness. These reports can be raised by the People Leader, with the People Team, by KPMG FairCall and other things. The KPMG FairCall is a program that is available to all the employees as a part of the Whistleblower Program by the organization. All the suspected breaches of code are investigated properly so the offenders can strictly be punished. This has a big impact on the performance appraisal of those employees in the future. (Crane & Matten, 2016).

Social responsibility

The social responsibility of National Australia Bank has a deep impact on the profitability of the customers through benefitting them in most ways. This makes the relationship with the customers stronger than ever (Cheng, Ioannou & Serafeim, 2014). These things also low down the business risks and enhance their business reputation in the business sphere. They are very much aware of their responsibilities and they try to serve their customers by providing them all the necessary things.

 They act very responsively towards their customers and they focus in social innovation process. They try to build strong foundations on philanthropy. They provide help to the local communities through various campaigns, health camps and providing the means to live a happy life (Crane, Matten & Spence, 2013).  They create a shared value with their customers that are essential for sustaining their position strongly in the banking industry. They assess all the climate change risks and take appropriate actions as needed. They try to build up a low-carbon economy that is very efficient for the society indeed. They protest against the social issues like gender inequality, domestic and family violence and supporting the people of local communities to avail the affordable housing.

Environmental sustainability

NAB has been one of the leading banks that has achieved a great height in the environmental sustainability (Moldan, Janouškova & Hák, 2012).  They have approached this issues by being enough responsible by understanding and managing all the impacts that environment has on their business profitability. They have realized that the climate change has affected their business in a large manner. They have taken some policies engaging all the customers and the communities in which they operate (Bergstrom, & Randall, 2016).  They are trying to bring down the waste products and reduce the consumption rates of the environmental pollutions. NAB is trying very hard to take strict actions for the good of the environment and the business process as well.

Stakeholder approach of NAB

The stakeholders are the important resources for profit in all the organizations. NAB is also one of them as well. They have opened the retail banking process and they have made their relationship with the consumer advocacy organizations stronger (Henisz, Dorobantu & Nartey, 2014).  They have thought of financing the fossil fuel industry keeping in mind the changing scenario of the environment. The main stakeholders of NAB are customers, employees and contractors, investors like shareholders, fund managers, analysts, suppliers, industry bodies, the associations, regulators, and the wider community that includes the NGOs, community partners and media, of course (Henisz, Dorobantu & Nartey, 2014). 

They have always given value to take the feedback from the stakeholders to know the extent of their engagement. They have taken the feedbacks from the NGOs and the ESG analysts as well. They tend to apply a number of approaches to satisfy their stakeholders through effective dialogue making. Through these things, NAB has become quite popular among their stakeholders and bringing the best out of them.

Conclusion

This paper can be completed by highlighting the facts that NAB has become on eof the most important organizations in the banking industry. The internal and external environments of the organization have been discussed in this paper to address the issues that they are facing in this modern challenging business environment. The threats of the new entrants have been concerned things in this scenario. NAB has been experimenting with certain strategies that will probably help the organization to thrive better. Other issues in this context like the sustainability, corporate social responsibility, environmental issues and stakeholder management have been described to understand the business conditions of National Australia Bank.

References

Barney, J. B. (2014). Gaining and sustaining competitive advantage. Pearson Higher Ed.

Bergstrom, J. C., & Randall, A. (2016). Resource economics: an economic approach to natural resource and environmental policy. Edward Elgar Publishing.

Cheng, B., Ioannou, I., & Serafeim, G. (2014). Corporate social responsibility and access to finance. Strategic Management Journal, 35(1), 1-23.

Claessens, S., & Horen, N. (2014). Foreign banks: Trends and impact. Journal of Money, Credit and Banking, 46(s1), 295-326.

Crane, A., & Matten, D. (2016). Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press.

Crane, A., Matten, D., & Spence, L. J. (2013). Corporate social responsibility in a global context.

Dana, J. D. (2012). Buyer groups as strategic commitments. Games and Economic Behavior, 74(2), 470-485.

Henisz, W. J., Dorobantu, S., & Nartey, L. J. (2014). Spinning gold: The financial returns to stakeholder engagement. Strategic Management Journal, 35(12), 1727-1748.

Hollensen, S. (2015). Marketing management: A relationship approach. Pearson Education.

Moldan, B., Janoušková, S., & Hák, T. (2012). How to understand and measure environmental sustainability: Indicators and targets. Ecological Indicators, 17, 4-13.

Nab.com.au. (2017). National Australia Bank. [online] Available at: https://www.nab.com.au/ [Accessed 8 Dec. 2017].