Analysis of Case study
The below mentioned report evaluates the analysis of the Commonwealth bank on the basis of different issues occupied by the company. The report evaluates the case scenario discussion on the basis of five theories of management. Four theories of management have been discussed in the case with one theory of ethics applied. Commonwealth Bank is one of the big four banks present in the country Australia. The Bank work with an aim to help the people attain simple banking services in the environment. However, many times the bank fails to manage the privacy of customers and perform actions that affect the interest level of customers in the market. Further, the report evaluates the actions initiated by the bank on the basis of different theories of management along with one theory of ethics as well. More details about the case are discussed below:
Commonwealth Bank of Australia faced the problem of internal governance due to its privacy breach issue held in the target market. The management of the company admitted that they lost the information of their more than 19 million account users. The company lose the data for more than 15 years of the customer’s statements that affected more than 19 million account users of the company. The company also went against telling the customers about the issue. The acting group executives of the retail bank admitted the cause through a video stating that the company had earlier commissioned with another organization naming Fuji Xerox with an aim to decommission one of its data storage centre (Knaus, 2018). The centre included the backup of magnetic tape drives that included financial information of the clients from the year 2000 to 2016. Later with time, the management realised that they have no proof t show that the third party has actually destroyed the tapes or not. The Bank also failed to find out the evidence of the tape due to which it was realised that the tape went missing but soon after that it was concluded that the chip has been discarded (Hendy, 2018).
The bank also formed ‘Project Chesapeake’ task force along with KPMG to investigate the whole incident. The Commonwealth bank was clearly guilty under the case that they irresponsibly handed over the important information of the customers to some association and did not look after the activities post occurrence of the event. The organized team along with the team of KPMG undertook the investigation to which no traces were received of the theft of the tapes. The manager of retail bank of CBA issued the notice that the customers do not need to change their PIN as they were not leaked. Only partial information that were required to make financial statements were present in the tape that cannot hamper the interest of any person. Incidents like this are not acceptable in the environment for which the bank regulators slammed the company under the widespread sense of complacency. Since then, the regulators have started taking more care of the activities of the company. another news also came as a headline now that stated that CBA and ANZ are caught in fake banking scam. The malicious banking app of the company ask for the credit card details and log in credential of the customer and their account details as well. The company has been charged under this case as well (Smith, 2018).
Deontology Theory of Ethics
According to the deontology theory of ethics, an action is considered moral only if it is based on the rules of law. According to this theory of ethics, it is not important to look at the consequences of an event, what important is that the actions should always be performed on the basis of rules and guidelines proposed in the environment. If a person accidently breaches a rule while conducting some business actions in the environment. Then that action is regarded as unethical even if it provides satisfaction to greater level of community only a whole (Kagan, 2018).
The most important as aspect in the given is case is the compliance of the rules and regulations in the society. Further, relating this theory of normative ethics with the CBA activities, it should be noted that according to this theory the company has performed entirely wrong actions in the environment. Irrespective of the consequences of the event, it should be noted that the company did not complied with the rules and regulations related to privacy of people resulting to which such incident happened in the society (Waring, 2016). Further, another wrongful action that the company initiated in the environment was that it kept this information of destroying the tape secret from the customers of the company. It is the right of the stakeholders in the society to attain information about the actions of the company and gain information that can affect their interest level (Fryer, 2016).
The system of an organization can be either closed or open, an open system is open that contacts to the outside environment and its different characteristics while the closed system is concentrated to the inward structure of the organization and there is no extent of collaboration with the outer environment. System is the most particular part of an association that causes them to sort out the business capacities to achieve accomplishment in the objective market. Relating the instance of Commonwealth Bank with the system theory, it ought to be noticed that the organization being a part of the open framework, it was vital for them to deal with the emotions of each individual connected to the stakes of the bank (Greenwood, Oliver, Lawrence, & Meyer, 2017). The contributions of the organization ought to likewise bring gainful yield for the external market.
The Commonwealth bank enough made utilization of input contributions of the organization however it didn’t bring out effectively compelling results for the general public. Feedback loop is additionally a critical piece of the system theory of the management as it causes the organization to understand feedback given from the outside environment and amend the business structure too (Shafritz, Ott, & Jang, 2015). The Commonwealth Bank a few times confronted the negative feedback loop from the market in light of the issue of security and privacy breach. Still the organization did not consider the criticism important because of which they at last confronted such a consequences in the business (Miner, 2015). Criticisms or negative feedback loop are imperative piece of the system that the organization ought to see appropriately. With the assistance of an input, a company develops viably; it additionally helps the business in understanding the zones where the organization is falling back. But, in the occasion of giving many feedbacks to the bank in the market, the management neglected to completely fulfil the client’s privacy requirements present in the market. The organization was to blame when it kept such data mystery from the clients also. The clients of the bank are also a part of the system so it was their right to achieve information about the privacy breach function of the organization (Anheier, 2014).
System Theory
Bureaucracy is an organizational process that is sorted out into standards, process and strategies that segregates the work into different groups in an association. Max Weber who constructed his suppositions about this hypothesis based on Frederick Taylor’s scientific management hypothesis. This hypothesis of bureaucracy applies on the human resource administration so that it plans determined job to every individual present in the association with the goal that they can viably work to make progress. This theory of bureaucracy weights on the assigned jobs for the employees and the administration in view of their hierarchal structure and streamline expert in order to guarantee who is in control and who isn’t (Young, & Ghoshal, 2016). This subject causes the administration to break down the jobs and duties of every individual associated with the manageement and demand them to finish their work successfully. Relating it to the give case, it ought to be noticed that the theory helps to comprehend that there are determined regulations govern the acctvities of each and every representative of the company.
So also, in the given instance of Commonwealth Bank, the bank gave the obligation to the sub-contractor worker to dispose of the tape (Thompson, 2017). But, the contractual worker neglected to agree to the activity job for which the organization should pay penalty also. This perspective additionally gives a mechanical, efficient way to deal with the human resource with the association. As indicated by this theory of management, each individual is entitled for a particular occupation job and they need to fulfil the necessities too, keeping in mind the end goal and to effectively assist the association with growing. The adequate flow of work and human resource management encourages the association to pick up accomplishment in the market (Hislop, Bosua, & Helms, 2018). The organization Commonwealth Bank neglected to perform such activities in the market in light of the fact that at first destroying the tapes was given to an association that was not an important part of the chain of the organization. As the association was not a part of the systematic chain of the company because of which the bank forgot to focus on this act and take follow-up, instead it kept the data of devastating the chip private. The organization ought to have given this work to an employees who is dependable and a part of the organizational structure of the organization (Argyris, 2017).
Bureaucracy Theory
The administrative theory of management endeavours to discover a way to outline the elements of the association on an entirety. This sort of hypothesis is related to the process of management with the formalized association structure in which organizations work. The administrative theory of management was given by Henry Fayol, the hypothesis depends on the idea of departmentalization. This process implies that diverse activities in an association ought to be performed with an aim to accomplish the common purpose for the association (Scott, 2015). To achieve the goal of the organization, the administration ought to diverge the labor into different gathering so that work is adequately performed. In short, it is very well said that this theory talks in regards to the manners by which an associations should formulate the actions of organization (Dalton, 2017).
This theory restrict the scientific hypothesis of management as it focus on the association and integration of work and structure and not on the effectiveness of the organization. Nonetheless, for this situation of Commonwealth Bank the organization required to work with productivity and according to the given authoritative organizational structure too (Bratton, & Gold, 2017). As indicated by the administrative theory of management, the organization neglected to effectively work in the objective market because of the inefficiency to carry out functions effectively and the viability to work according to the regulations too. The bank additionally did not deal with the organizational activities successfully because of which the risk of altering the tape increased. Being a part of the financial industry, it is imperative for the administration to properly deal with the money related data connected with the organization and obliterate the data appropriately so it doesn’t go in the wrong hands. Nonetheless, the organization neglected to oversee the business functions because of which they confronted such issue in the industry (Gond, Cabantous, Harding, & Learmonth, 2016).
The human relations theory explains that the management system has become more human centred and less based on machineries. It is important for the companies to emphasize on the talent of the individual and act accordingly to bring successful outcome of the activities (Miner, 2015). This theory also talks about the ways in which the higher level management should interact with the lower level management of the company. Relating this hypothesis with the CBA activities, it should be noted that whenever an organization come in contact with another organization to get some work done, it is important for them to take follow up on a regular basis so that work gets completed according to their requirements. The CBA forgot look that the work is complete by the subcontractor or not, resulting in which such issue aroused in the company (Rahim, 2017).
Conclusion
Thus by concluding all the above mentioned facts it should be noted that the Commonwealth Bank is working adequately in the target market. However, the company is struggling to manage their position in the market due to the unethical privacy breach acts initiated in the environment. CBA provided the tape to the sub-contractor to discard it. However, the company did not look back to its actions that the contractor actually discarded the tape or not. Resulting to which it gave a threat to the privacy of the customers in the market. There are five theories explained in the essay that evaluated the case of the basis on management and ethics.
Below mentioned are few recommendations that the company CBA should consider while initiating their business actions in the target market:
Implement adequate organizational structure: the Commonwealth Bank should make use of adequate organizational structure that should help to segregate the authority and responsibility accordingly. It is important for the management and all the employees to understand their responsibilities and work within the scope of organization only. The management didn’t took follow up from the sub-contractor due to which such issue geared up in the society. So, it should be noted that a formal organization structure will help all the employees to understand their responsibilities and complete the actions accordingly. With this process, the company will breach any regulation in the society.
Increase transparency: It is important for the company to initiate actions in such a way that transparency in the activities of the company is increased. The organization should make sure that the stakeholders of the company are satisfied with all the activities that they perform in the environment. Increase in transparency will also increase the faith of customers in the activities of the company.
References
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Greenwood, R., Oliver, C., Lawrence, T. B., & Meyer, R. E. (Eds.). (2017). The Sage handbook of organizational institutionalism. US: Sage.
Hendy, N. (2018). CBA and ANZ caught in fake banking apps scam. Retrieved from: https://www.smh.com.au/money/banking/cba-and-anz-caught-in-fake-banking-apps-scam-20180919-p504si.html
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Kagan, S. (2018). Normative ethics. UK: Routledge.
Knaus, C. (2018). Australia’s banks dodged the financial crisis. Then they got complacent. Retrieved From: https://www.theguardian.com/australia-news/2018/jun/09/australias-banks-dodged-the-financial-crisis-then-they-got-complacent
Miner, J. B. (2015). Organizational behavior 1: Essential theories of motivation and leadership. UK: Routledge.
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Shafritz, J. M., Ott, J. S., & Jang, Y. S. (2015). Classics of organization theory. US: Cengage Learning.
Smith, P. (2018). Commonwealth Bank under fire again for data breach of 19m accounts. Retrieved from: https://www.afr.com/technology/web/security/commonwealth-bank-admits-customer-data-breach-affecting-19-million-accounts-20180502-h0zkh7
Thompson, J. D. (2017). Organizations in action: Social science bases of administrative theory. UK: Routledge.
Waring, S. P. (2016). Taylorism transformed: Scientific management theory since 1945. North Carolina: UNC Press Books.
Young, C., & Ghoshal, S. (2016). Organization theory and the multinational corporation. Germany: Springer.
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