BUS9228: Strategic Marketing - Woolworths - Situational Analysis - Assessment Answer

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Question: Strategic Marketing

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Situation Analysis of National Australia Bank

Introduction

National Australia Bank is a major financial institution in Australia with regard to customer numbers and market capitalisation. Regarding market capitalisation, the bank currently stands as the twenty-first largest bank globally and the forty-first bank in the world concerning total assets. The bank has services in Australia, New Zealand and Asia serving an almost thirteen million customers priding itself on building a business that understands its customers and supports them. The bank is Australia’s largest business bank working with small, medium and large firms in helping them start, run and grow. What it aims to undertake is a business in a way that is responsible, innovative and inclusive. The following is a situational analysis of the bank focusing on the external environment of the National Bank of Australia.

PESTLE Analysis

To fully understand the situation analysis of National Australia Bank, different factors that can affect the business must be researched and fully understood. An analysis of the external environment will be undertaken using the PEST analysis, and the following gives a summary of the current situation, analytically assesses it and provides a strategic outlook of the analysis.

Political

In analysing the political climate of the National Australia Bank, it can be found that various factors will influence the position of the bank in the country and around the region. There are current changes in government regulations as a result of the financial crisis recently experienced. Furthermore, the Henry Tax Review that proposed Superannuation be increased by three percent from the current 9 percent to 12 percent, as well as simplifying the superannuation in the coming five years (Bateman & Kingston, p. 441). As a result of these changes, the position of the National Australia Bank will be significantly boosted by the Government’s actions to promote small business and create employment. The government intends to ease pressure on the availability of credit which will serve to increase the bank's core customers (Vento & La Ganga, p. 107). Such a measure will help to increase the dominance of the company amongst its small business segment. Moreover, National Australia Bank should look to decrease its compliance fees due to regulations meant to minimise the operating costs, and this will strengthen its market position.

Economic

The financial crisis had significantly influenced the economic status of the bank. Numerous factors impact economic growth, for example, reduced credit demand, competition, slow economic growth, and increased funding costs. Government regulation has helped National Australia Bank to maintain its liquidity while a decrease in national economic growth has led to increasing competition (Davis, p. 313). Furthermore, various other factors have led to the bank experiencing reduced economic growth in its other global affiliates which have negatively impacted its bottom-line. The National Bank of Australia needs to leverage its strong customer relationship and reputation to grow its customer base and increase its economic growth in Australia because of the favourable regulations and the focus on increasing liquidity for small business that creates employment. As an incentive, the bank needs to focus on improving its product lines to attract single customers because of the growing confidence in banks after the financial meltdown. The company needs to concentrate on attracting a young technology savvy generation through investments in innovation and technology (Westerman, et al., p. 36). Australia’s demography is changing with an increase in a young population, and National Australia’s Bank should recognise this and increase investment in ventures that will attract this key demographic.

Social

The advancement in technology has drastically altered customer’s banking behaviour. Statistics from a Nielsen Survey in 2012 indicated that seventy percent of customers use internet banking. However, a significant 54 percent of clients still visit physical bank branches to do their banking. Mobile banking is also growing especially with the young technologically savvy generation. Due to this, the National Australia Bank should increase its technological innovations to encourage customers to use a means of banking that is efficient and convenient.

The continual growth of mobile banking is an indicator of the growing importance of the young generation in banking. Consequently, the bank should invest its resources into mobile banking to attract these key demographic to tap into future markets (Westerman, et al., p. 39). Furthermore, the National Australia Bank should increase its presence on social media to attract and engage this key growing demographic because they will soon form the backbone of the bank’s customers. The social media presence will significantly reduce costs of customer engagement and increase its brand visibility. Moreover, the bank should increase its social media presence with social responsibility through engagement with community activities and investments. Through such business activities, the bank’s brand will be promoted, and its image will improve among communities.

Technological

The last several years have witnessed the rise of mobile and internet banking as preferred means of banking to physical banking and ATMs. The National Australia Bank realised the importance of technology with its ‘NextGen’ upgrade of its core banking system (Lemay, p. 2). However, even with the completion of the upgrade, the bank was seen to suffer from growing problems and challenges. Positively, the bank has been awarded numerous awards for its Customer Relationship Management system, and it was noted as being the first bank in Australia to implement such a system (Lemay, p. 1). Going forward, the company needs to invest in technology that will increase customer convenient and ease of transaction. Such technology could include the recently launched Near Field Communication Chip (NFC) for mobile payments. NFC is particularly popular with the youth demographic because of its convenience and protection which will be an added benefit and will increase the bank’s competitiveness. Finally, the bank should initiate internal technology upgrades that will improve employee efficiency because they can access data faster than it was previously possible.

Environmental

Social responsibility plays a crucial role to National Australia Bank, and it invests at least one percent of cash earnings before tax to corporate social responsibility efforts. It also has numerous strategies to reduce energy consumptions, for example, the investment in a tri-generational power plant that reduces its power intake (National Australia Bank, p. 71). Corporate Social Responsibility is playing a crucial role recently for commercial companies, and National Australia Bank needs to increase its environmental awareness through direct investments in communities to increase its image and visibility. It needs to create a direct relationship with communities through social responsibility actions.

Legal

Australia’s banking sectors and the National Australia Bank self-regulates its services as a result of the deregulations that started in 1980. However, the services of National Australia Bank are regulated by two regulators – the Australian Security and the Investments Commission (ASIC) and Australian Prudential Regulatory Authority (APRA). The ASIC sets out regulation on market integrity, consumer protection and finance companies; it also handles dispute resolution. In addition, the ASIC sets out the Code of Banking Practice mandating the behaviour of banks with its customers. Concerning the Code of Banking Practice, National Australia Bank should look to decreasing disputes that arise from its customers. Furthermore, with self-regulation National Australia Bank needs to improve its relation with customers and communities to improve and enhance its public image and public trust.

The APRA is responsible for the Superannuation funds and it recently set out regulations that stipulated the increase in superannuation from nine percent to twelve percent in five years (up to 2020). Strategically, this is a motivational factor for its employees to become productive, efficient and increase overall bank profile.

Conclusion

It can be deduced from the situation analysis of the external environment of National Australia Bank that there are more strategic opportunities to improve its revenue growth and attract more customers. The above situation analysis has come to the conclusion that the bank needs to improve its model operation through leveraging on political opportunities, economic growth, the social factors, use of technology and increasing innovation, environmental actions and being proactive with legal matters. With an increasing borrowing demand, improving financial regulations National Australia Bank will need to develop a new business strategy that attracts new customers, even if the business plan involves implementing a social media presence to increase brand visibility and customer engagement.

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