NAB Corporate Strategies National Commercial Banking

Question: Discuss about the NAB Corporate Strategies for National Commercial Banking. Answer: Introduction Initially, the National Australia Bank (NAB) was incorporated as the National Commercial Banking Corporation of Australia after the merger of commercial bank of Sydney and the National Bank of Australia in 1982. Morison Ramsay, (2015) points out that the resulting bank was renamed as the National Australia Bank Limited. The expansion of the bank financial bases elicited the offshore bank expansion in the subsequent years. This paper is going to focus on some aspects inherent to strategic change in NAB as well as present growth strategies. Growth and development of the organization through application of corporate strategies Expansion strategies included opening up of branches in major cities in the world such as Beijing, Seoul, Dallas, San Francisco, Taipei, and Athens. The bank has focused on acquisitions as the main drivers of the bank corporate strategy (Fungi et al., 2002, p. 399). NAB activated a buyout clause for the Clydesdale Bank from Scotland and the Northern Irish bank from the Midland Bank. Subsequently, the bank bought the Yorkshire Bank from England and Wales in 1190. Adams (2012) pointed out that, the further acquisition has followed such as; acquisition of Bank of New Zealand in 1992 and also the Michigan national bank in 1995. Earlier the bank had restructured its operation in the USA by closing it branches in Atlanta, Houston, Dallas, San Francisco and Houston in 1991. Expansion period for the bank was concluded by a purchase of USA mortgage originator, Home side Lending based in Florida USA (Laing Dunbar 2015, p. 41).In addition to that, acquisition the bank also merged with MLC Limi ted which formed one of the biggest mergers in the corporate history of Australia. NAB encountered a difficult phase of history (2000-2005) after the sale of Michigan national bank to AMRO. In the year 2001, the bank traded home side Operating assets for US$1.9B to a US-based savings and loans corporation known as Washington Mutual. Corporate strategies pursued by the corporation have ensued growth and stability of NAB over the years. However, some of the growth strategies pursued by the entity have hurt the corporation over the years of its development. Presently, the bank has embraced technology in its operations as in October 2008 NAB launched a branchless direct trading known as You Bank under the stewardship of Greg Sutherland. Cameron Clyne became the CEO of the bank in January 2009, and he initiated reputation change, increased focus on the domestic market and subsequently increased wealth management. In May 2015, the bank announced break off a merger from Yorkshire and Clydesdale business in the UK. The demerger was through initial public offering through floatation on the London stock exchange. However, the remaining shares were distributed to NABs shareholders according to Klettner (2014). Applied corporate strategies NAB growth has progressively advanced due to corporate strategies that have been initiated by the enterprise including the customer segments and the NAB market operations. Competition and the level of differentiation faced by NAB are a determinant factor altogether. Delivering value to the shareholders has been NAB main corporate goal over the years. To meet this goal, the entity has come up with strategies that have been used to measure the performance of the entity. Strong, B. (2014) indicated that over the years, the NAB has turned the customers to be advocates of financial performance with the aim of achieving the highest Net Promoter Score. Modest gains have been an achieved after employment of this corporate strategy such that in 2015, the corporation NPS priority segments improved from -18 to -16. In 2016, there was continuous improvement in customer experiences across NAB business portfolio. Customer experience across all range of products such as simplifying processes, policies, technology, and products resulted in the improvement of 500,000 customer sales and service per annum improvements. Furthermore, there has been the improvement of turnaround times for customers making their variations to their mortgages. Besides, there has been the reduction of the time taken to approve simple business loans. In addition to that, there has been reduced paperwork in the application of business loans, commercial cards and processing of business loans. Moreover, the bank has come up with a net promoter system(NPS) used to measure consumer advocacy role and also improve the understanding on offering better customer experience in the stipulated priority segments Nicholas and Donald (2015, p. 1541). NAB management have a corporate strategy that has ensured business growth in the entity from the period it was incorporated. NAB has created high-performance values aligned culture that aims at provision of a high-performance benchmark index. In the FY 2015, employee engagement for the group increased to 52%in FY 2015 from 42% in 2014. Innovation has have been a key corporate strategy towards the growth of NAB over the years. A great example is the NAB village at Melbourne. This is a platform and an innovative space that provides customers and businesses to connect with clients and on the other hand, both the customer and business can connect with each other. The value of this platform is has been demonstrated by having over 25% of the member having a banking relationship with NAB. In FY 2015, NAB has invested heavily in internet banking and inculcation of, mobile platforms in the banking industry. We have also delivered new solution inherent to innovation thus small business can lin k their banking transactions with accounting packages such as Xero (Petty 2012, p. 8). The bank has also come up with an attractive return on equity to their shareholders. In the FY 2015, statutory return on equity inherent to NAB reached 100 basis point (13.1%) when compared to FY 2014. In the same period, cash return on equity increased by 40 basis points (12%). NAB has come up with a performance framework within the Australian markets. Among the Australian units, the new framework has provided granular performance, discipline and also acts as the driver for clear accountability. Besides, the BNZ framework has been instituted to leverage learning and told from NAB. Change in an every institution is inevitable thats the reason NAB has instituted transformative investment in technology. The new Personal Banking Origination Platform (PBOP) has significantly improved approval of loans for both bankers and customer alike (Moscardo et al, 2013, p. 1).This system allows refilling of data and also enable customers to have a track of the status of their application which incl udes upload of information such as pay slips through online platforms. Criticisms of business practices pursued by NAB over the years In 1990, NAB ventured into the English market and purchased the York Shire bank. Also, the expansion continued to New Zealand when it acquired Bank of New Zealand (BNZ) as pointed out by Rehman (2015, p. 7). Notably acquisition of BNZ and later other overseas banks was not a corporate strategy, but it was a bank reaction towards other Australian banks so as to earn a code name Universal Banks the outcome of this acquisition took a toll towards growth process of this entity. In 2002, NAB was forced to offload its operation with Home side entity which resulted in a loss of US$ 2 billion. This loss was great enough to wipe out all small gains by NAB overseas Rahman (2015) points out that Although NAB has performed exemplary over the years, there have been some strategic failures that have cost the going concern of the entity. In the first quarter of 2015 FY, NAB announced demerger from Clydesdale enterprise. The move taken as an expansionist strategy and resulted in a loss of approximately A$4.2 billion. It's believed that the loss might be bigger. Demerger from the York-shire/ Clydesdale Bank marked and ended to the 30-year strategy of expansion for NAB. Environmental analysis Threats In the year 2006, NAB Enterprise received negative publicity regarding the financial services that were offering in their loan portfolio (Singh, 2015). The Centre for financial and lending rates in Sydney assorted NAB mortgage products exhibited high-interest rates. Mr. John Stewart, the NAB president, received the complaint from the Australia Bankers Association, who warned that some of NAB products are violating the financial act. Such products as mortgage plus and 4% bond issues violated the financial acts (Hamilton, 2015). In addition to that, the spread between the lending and the deposit rates were not congruent with each other. It was against the Australian financial act not to streamline bank interest rates. Evidently, NAB financial products were a grave danger to Australian aspect of investments (Klettner 2014, p. 23). Strong (2014) asserts that global brands such as NAB have a defined code of ethics that communicates what is expected of the employees and companies officials as denoted by Taylor, (2015, p. 4). Failure to observe the laid down procedures means may prompt the employee to be dismissed from the enterprise. In 2008, some NAB officials had tried to bribe the Australia bankers union executives to allow them to lend loans above 4%. Bribery is a social evil which is not allowable in the Australian culture. This instead heightened the existence of a cultural misunderstanding in the exchange processes and business transactional practice as asserted by Tran et al. (2014, p. 5). However, the enterprise intervened a subsequently dismissed the employees. On the other hand, the Australia bankers association recalled all the lend out loans and subsequently capped then at 4%. Opportunities NAB Enterprise enjoys the massive economies of scale in its operation. The enterprise market has more than 40 different parts n the world. Presently the enterprise has rolled out a plan to market its financial products into emerging economies in South America, East Africa, and Eastern Asia. After carrying out intensive market research; the enterprise introduced long-term financial services such as futures and options in Eastern Asia in the 1990s One of the major global growth strategies for NAB is advertising. Most importantly, NAB uses billboards, print, and electronic media as part of its worldwide growth strategy. Strong, (2015) denotes that, advertising in NAB was meant to convince customers on various products and services the enterprise had in store to offer. Additionally, some communicated information on constructing some societal values. This marketing method was appropriate to the Australian setting. NAB has used this strategy which has growth of financial services such as futures and stock splits in the Australian markets. Culture and leadership style Singh (2015) denoted that, NAB CEOs have used transformational leadership theory as the most efficient and effective style. Initiation if this theory was brought about by a strategist named James McGregor Burns. According to him (Singh) applicability of transformational leadership is efficient when members and leaders promote the advancement of service delivery in the NAB through morality and motivation. Tran et al., (2015) alludes that, members of the NAB leadership have to use their influence on members to change their perceptions and expectations and start working towards a common goal. NAB leaders need to identify the need for change required in the entity. To achieve this goal, he must create a vision that will act as an inspiration to the member, which bring positive attitude change to members. Murray, (2014) illustrates that, NAB leaders have cascaded customer safety and quality orientation in NAB setup. This is done by building and improvement of capacity. Creation of organizational culture communicates the vision to the members thus enhancing clinical quality and eliminating error that could negatively have an impact on customer safety. Moreover, transformational leaders may have a developmental culture of improvement that has encompassed commitment towards learning and research towards the improvement of customer safety. Although, transformational leadership has achieved a lot in NAB leadership, some changes need to be instituted such as electronic detection of errors and fraud Morison Ramsay,(2015) denoted that, evidenced based practices which are well defined should be replicable across provision of NAB financial services. Use of such established policies is key components towards organization safety and quality strategy., Ongoing and sustained improvement in the safety of the customer is a key component in communicating the vision for NAB organization. As a part of the strategy, reporting of results and subsequent meeting stakeholder and public expectations are part of the transformational leadership that promotes customer safety and strategy. If these changes are instituted leadership in the NAB would enhance efficient provision of services to customers as denoted by Tran et al., (2015, P. 2). Conclusion To sum up, it's no reasonable doubt that NAB is one the financial influencers in Australia. Although NAB has performed exemplary over the years, there have been some strategic failures that have cost the going concern of the entity. However, customer services have been enhanced through customer safety and quality orientation in NAB setup. Presently the enterprise has rolled out a plan to market its financial products into emerging economies in South America, East Africa, and Eastern Asia to act as the drive for its corporate strategies. List of references Adams, J., 2012. National Australia Green Push Big on the Cloud', American Banker, 177, 135, p. 9. Fung, J., Bain, E., Onto, J., and Harper., I 2002. A decade of internationalization: the experience of an Australian retail bank', Journal Of International Financial Markets, Institutions Money, 12, 4/5, p. 399. Klettner, A., Clarke, T., and Boersma, M., 2014. The governance of corporate sustainability, Empirical insights into the development, leadership and implementation of the responsible business strategy. Journal of Business Ethics, 122(1), 145-165. Laing, G., and Dunbar, K., 2015. EVA (TM) EPS, ROA, and ROE as Measures of Performance in Australian Banks: A Longitudinal Study. Journal of Applied Management Accounting Research, 13(1), 41. Morison, R., and Ramsay, I., 2015. An analysis of companies' business objectives. Gover Moscardo, G, Lamberton, G, Fallon, W, Lawn, P, Rowe, A, Renouf, M, 2013, Sustainability in Australian business: Principles and practice. Wiley-Blackwell. Nicholls, R., and Donald, S., 2015. It's a Small World after All, Using Social Network Analysis to Investigate Systemic Risk in the Australian Superannuation Sector. Centre for Law, Markets, and Regulation (CLMR) Research Paper Working Paper, (1541). Petty, S., 2002. Study prods banking giant to sharpen image', Media: Asia's Media Marketing Newspaper, p. 8. Rahman, K., 2015. Generic, genuine, or completely new? Branding strategies to leverage new products, Journal of Strategic Marketing, 22(1), 3-15. Rowley, D., 2014. 'National Australia Bank Group Limited' 2014, National Australia Bank Group Limited Marketing Company Profile, pp. 1-29, Business Source Premier, EBSCOhost, viewed 31 August 2016. Singh, N., 2015. Online frauds in banks with phishing. The Journal of Internet Banking, 22(7), 373-377. Strong, B., 2014. Prudential regulatory governance of the risks associated with IT multi-sourcing strategies within the Australian banking sector (Doctoral dissertation, University of Southern Queensland). Taylor, M., 2009. Struggling National Australia Bank remains acquisitive', Money Management, 23, 41, pp. 2-5. Tran, T., Nguyen, H., and Lin, C., Ton, G., 2015. Herding behavior in the Australian loan market and its impact on bank loan quality. Accounting Finance. 11(3), 273-277.