Introduction to Westpac Banking Corporation
Discuss about the importance of strategic development within an organization.
Westpac Banking Corporation, popularly known as Westpac is Australia’s second largest bank by assets and financial services provider with its headquarter in Sydney (Westpac.com.au, 2017). It has moreover 13 million customers with 5 customer facing division. Westpac aims to be world’s best customer serving company, helping the communities and consumer to grow and prosper by being financial services brand. The organization has designed to align customer segments with five major key divisions that include the Consumer Bank, Business Bank, Westpac New Zealand BT Financial Group, and Westpac Institutional Bank. Moreover, Westpac serve the monetary needs of multi-national corporate, government and institutional clients to ensure customer satisfaction with sound investment and saving.
Westpac vision is to be the world’s greatest financial service provider company. Westpac provides superior returns for their stakeholders to deliver its vision. Moreover by building deep and maintain customer relationships Westpac wants to emerge as leader at an international level. It is focused on the core markets of New Zealand, Australia and near Pacific to meet the financial needs of its customer by providing comprehensive range of financial services and product (Westpac.com.au, 2017). The sustainability strategy of Westpac to fulfill its vision is as follows:
- Anticipating the major shift of cultural and demographic change and its impact on the customers and Westpac workplace (Alvesson and Sveningsson, 2015).
- Generating economic solutions to overcome environmental challenges.
- Helping the customer to achieve sustainable monetary future in landscape.
- To meet the environmental challenges Westpac has various set of strategies that has successfully deployed in the past. Supporting the customer focused strategy is the strong set of organization wide-values (Yeates, 2017).
- Integrity is practiced in the organization and each of the employees is responsible for their actions and doing the right things.
- Customer satisfaction is the major strategy of Westpac to achieve its goal by deeply understanding the customers and exceeding their expectation.
- Maintaining high levels of capital by meeting the financial needs of all their stakeholders and fulfilling the requirements of the regulators.
- Maintaining high quality assets portfolio with strong provisioning.
Service leadership
- Providing seamless consumer experience throughout all channels.
- Deepening relationships through context-based consumer experience.
Digital Transformation
- Creating digitized bank and using advanced technology to with multi brand capabilities (Stead and Stead, 2013).
- Simplifying processes and the products by digitizing end-to-end.
Targeted growth
- Pursuing growth opportunities by focusing on small to medium enterprise
Workforce Revolution
- More emphasis is laid on customer service, culture and high performance workforce.
- Strengthening the skills of the employees to serve the customers better and fulfilling their financial needs.
- Empowering the people to create innovation and deliver new and improved ways for working and being responsive changes (Northouse, 2015).
- Enhancing the diversity of our employees.
- The bank bill swap rate that is also known as BBSW of Westpac is used in financial market of Australia is the crucial benchmark interest rateto help the banks to set the rates for commercial loans and business and is also important for open market. Legal action was taken against Westpac by ASIC and was alleged to be traded in such a way that artificial price for bank bills can be created on various occasions (Yeates, 2017). Moreover, it was alleged by ASIC that Westpac has various products that are valued or priced as per the bank swap rate or BBSW and are traded further in bank bill market for profit maximization and with the intention of changing the bill swap rate higher or lower.
- Westpac new climate changing policy statement and action planhas restricted the lending to the projects that uses highest quality of coal in power generation with advanced technologies (ABC News, 2017). Westpac has restricted it finances for the new mines and is supporting carbon price. This policy of Westpac is highly criticized and the federal Resource Minister of Australia has called Westpac as a wimp that is craving itself into environmental activists
SWOT analysis helps in analyzing the internal competitive strengths and weaknesses. Moreover, the analysis of organizational opportunities and threats in the business environment can be ascertained. This strategic tool would help the organization to design proper decision making, proper planning and its implementation.
Strengths:
Westpac is highly reputed bank with more than 1200 branches. The banking technique is highly advanced with high use of technology in banking, being one of the four major banks in Australia, it has high goodwill. It is the most corporate socially responsible Australian bank in the financial sector (Westpac.com.au, 2017). It provides flexible banking services to the people in the form of international student account and migrant banking. At institutional level, Westpac has not only its services in New Zealand and Australia but also has its branches in major countries like U.S.A Asia and EU. Westpac always place it female employees at par with the male employees.
Weaknesses:
There is always high rise of competition within the financial market. Westpac also faces a huge competition with remaining three major banks of Australia, that are National Australia Bank, Commonwealth Bank and Australia and New Zealand Banking Group. Westpac also have very less of its organizational branch at a global level. Moreover, not meeting with the demands and expectation of shareholders can also prove to be a great drawback for the organization. There is high competition from other leading banks in the retail banking segment.
Westpac’s Vision, Divisions, and Sustainability Strategy
Opportunity:
On getting license, Westpac can expand their customer oriented client base by opening various branches all over the world. The advanced and latest technological development would improve the overall organizational efficiency by improving product and employee efficiency (Frynas and Mellahi, 2015). Focusing on expanding the business in emerging and developing nations would also benefit Westpac through low operational cost, high profitability and efficient human workforce at low rate. Westpac can further expand globally on given license and provide new market development.
Threats:
Financial sector is an important aspect of an organization in an economy. Westpac is affected by any crucial variations or modification that takes place in the economic condition of Australia. If the banking rules and regulations of the country changes then the banking sector would get seriously impacted. Moreover, the regulatory changes and credit limit also impact the bank (Hubbard, Rice and Galvin, 2014). The worsening economy of New Zealand and Australia will have significant effect on Westpac.
In the current scenario, Westpac has modified its method of executing business activities in the banking industry. The five forces that are having crucial impact on the organizations profitability and the business industries it operates are as follows:
Threats of new entry:
In the banking sector new entrant brings innovation and increases the competitiveness through reducing costs, lower pricing strategies and thereforeproviding high value to their consumers. Westpac also have to overcome thevarious challenges by putting effective barriers and further safeguarding its competitive edge. By maintaining high economies of scale in the market, Westpac can lower the per unit price of the fixed costs.
Bargaining power of suppliers:
The dominant suppliers can reduce the margins of Westpac Banking Corporation earned in the market. The negotiating power used by the suppliers lead to obtaining maximum prices from the organization in the banking sector. The bargaining power of the supplier leads to lowering the overall banks profitability (Wheelen and Hunger, 2017). Westpac can build adequate supply chain management with its various suppliers. It can further experiment with the design of their products by providing unique materials, which would help the company can shift to another raw material, if the price increases for one.
Bargaining power of buyers:
The buyers always want to avail the best possible offer from the seller by paying the possible lowest cost. This approach of the buyers further put the profitability of Westpac in risk in the long run. Westpac innovates its strategies at a rapid pace and often seek discount to its customers. Offering established products of Westpac can further control the buyer’s bargaining power. New products can moreover reduce the defection of current customers of Westpac, thus increasing its competition.
SWOT Analysis of Westpac Banking Corporation
Threats of Substitute Products:
When the production of new products and services fulfills the customer needs through various techniques, the profitability of the industry suffers (Büschgens, Bausch and Balkin, 2013). Services like Google Drive and Drop box and are substitute to the storage hardware devices. Westpac should avoid the threat of its substitutes in the business environment by becoming more service oriented and helping the community rather than being like other banks that are mostly product oriented. The core needs or priorities of the customer should be understood to provide maximum satisfaction to the customers. The switching cost of the customers should also be increased.
Rivalry among the existing competitors:
If the existing rivalry of employees within the organization is more than it would definitely lower the prices. It will further decrease the efficiency and profitability of Westpac that affects the banking industry. Westpac Banking Corporation performs its operating activities in a high competitive Banks industry. Such huge competition takes toll on the long term profitability of the organization. Westpac can tackle such intense rivalry through proper collaboration with the competitors in the market to increase its prices and by maintaining sustainable differentiation.
The organizational culture of Westpac is cultivated over many decades and created positive impact on the communities besides creating value for the business. The major organizational culture and business model of Westpac depends on helping its communities. Through number of initiatives, the organizational culture and the competencies are encouraged.
Skilled volunteering:
The employees actively involved in volunteering for their organization in the local communities is supported by providing them community leave and flexible working condition (Morden, 2016). The existing skilled volunteering opportunities include the Jawun Indigenous Corporate Secondments and Westpac Foundation partner mentoring opportunities.
Corporate social Initiatives:
Matching Gifts is one of the corporate initiative of Westpac and first of its kind to be initiated among the Australian Banks. Westpac employees make further donations to the charities by matching dollar for dollar, employee donations, enabling the charities so that the amount receivable is doubled than the initial amount of donation.
Flexible workspace:
The new ways of working are explored in Westpac that is motivating and empowering that can further inspire the employees with maximum efficiency and productivity.
Diversity in workplace:
The Westpac Banking Corporation haves an inclusive workforce that build the foundation for innovation and created a better working environment irrespective of cultural identity, age, gender, sexual preference and work style (Peppard and Ward, 2016). Thus, by building a better scale so that it can compete in better working environment by creating a diverse workforce.
In the current scenario, the dynamic business world and the leadership style is constantly changing to keep its pace with the evolving landscape. Westpac empowers the people and community at large by serving them first. Westpac’s former leader Gail Kelly has made a benchmark for the world by being a successful leader and increasing the growth of the organization. As per Kelly, the old era of autocratic and top down leadership has gone, as now the business leaders are more generous, intuitive, collaborative and generous (Kimmorley, 2017). The former big bank CEO followed service leadership style and was generous spirited. The team members employed in Westpac are cooperative with high efficiency and skills to meet the goals of the business. The leadership style followed in Westpac helps in enriching the life of individuals by building better organization.
References:
ABC News, 2017. Westpac’s new climate change policy is bad news for Adani. [online] ABC News. Available at: <https://www.abc.net.au/news/2017-04-28/westpac-adds-coal-to-its-lending-black-list/8479600> [Accessed 27 Dec. 2017].
Alvesson, M. and Sveningsson, S. 2015. Changing organizational culture: Cultural change work in progress. Routledge.
Büschgens, T., Bausch, A. and Balkin, D. B. 2013. Organizational culture and innovation: A meta?analytic review. Journal of product innovation management, 30(4), 763-781.
Frynas, J. G. and Mellahi, K. 2015. Global strategic management. Oxford University Press, USA.
Goetsch, D. L. and Davis, S. B. 2014. Quality management for organizational excellence. Upper Saddle River, NJ: pearson.
Hill, C. W., Jones, G. R. and Schilling, M. A. 2014. Strategic management: theory: an integrated approach. Cengage Learning.
Hubbard, G., Rice, J. and Galvin, P. 2014. Strategic management. Pearson Australia.
Kimmorley, S. 2017. Gail Kelly on what it means to be a successful modern leader. [online] Business Insider Australia. Available at: <https://www.businessinsider.com.au/gail-kelly-on-what-it-means-to-be-a-successful-modern-leader-2017-4> [Accessed 27 Dec. 2017].
Morden, T. 2016. Principles of strategic management. Routledge.
Morschett, D., Schramm-Klein, H. and Zentes, J. 2015. Strategic international management. Springer.
Northouse, P. G. 2015. Leadership: Theory and practice. Sage publications.
Peppard, J. and Ward, J. 2016. The strategic management of information systems: Building a digital strategy. John Wiley & Sons.
Stead, J. G., and Stead, W. E. 2013. Sustainable strategic management. ME Sharpe.
Westpac.com.au. 2017. Westpac – Personal, Business and Corporate Banking. [online] Westpac.com.au. Available at: <https://www.westpac.com.au/> [Accessed 27 Dec. 2017].
Wheelen, T. L. and Hunger, J. D. 2017. Strategic management and business policy. pearson.
Yeates, S. 2017. ASIC says Westpac rigged rates. [online] The Sydney Morning Herald. Available at: <https://www.smh.com.au/business/banking-and-finance/asic-launches-action-against-westpac-over-bbsw-20160405-gnz3k2.html> [Accessed 27 Dec. 2017].
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