Management Assignment: Business Case Analysis Of National Australia Bank
Question
Task:
Write a well-researched management assignment discussing the business case of National Australia Bank in detail.
Answer
National Australia Bank
National Australia Bank, selected in this management assignment, is one of the largest financial institutions in Australia with more than 30,000 employees serving around 9 million customers at 900 worldwide locations include Australia and New Zealand. The mission of the company is to offer excellent services to customers and contribute towards community development (NAB, 2020a). The purpose of the research study is to analyse the impact of internal and external factors on the performance and decision-making of the organization. Thus, it has evaluated the governance structure, external environmental factors, major risks, business practices and functional departments of the company.
Governance Structure
The NAB Board consists of the Board Audit Committee, Board Risk and Compliance Committee, Board People and Remuneration Committee, Board Nomination and Governance Committee and Board Customer Committee. This indicates that the Board covers all the important functional and operational areas of the company. Furthermore, the management comprises of the Group Chief Executive Officer (CEO) and the Executive Leadership Team and Executive Management Committees (NAB, 2020b). The effectiveness of the governance structure is evident from the key elements that it takes under consideration including leadership and stakeholder focus, strategy and performance, financial reporting, risk management, remuneration and appointment and succession planning. The leadership and stakeholder focuses on protecting the rights and interests of the stakeholders of the company and to ensure that all members are abiding by the values, Code of Conduct and fundamental purpose (Miglani, Ahmed & Henry, 2015). The strategy and performance element ensures that all objectives are achieved depending on the strategic direction of the company. Financial reporting helps to represent the correct financial position through authentic information (NAB, 2020b). Risk management covers management of both financial and non-financial risks through the internal compliance and control systems. Remuneration element further ensures that the salary and compensation structure of Board, management and employees are aligned with the company values, purpose and strategic objectives. Lastly, appointment and succession planning looks after the key executive appointments by ensuring that effective leaders are chosen as successors. These elements help in enhancing the quality of NAB’s corporate governance by ensuring authenticity, honesty, integrity and protection of stakeholder’s rights.
External Environmental Factors
There are several external factors that have significant impact on the operation of National Australian Bank. PEST tool is one of the effective strategic tool to measure the external environment factors (Ho, 2014). Therefore, this tool will be applied to analyse the impact on the National Australian Bank.
Political
Political stability in the Australian region has an impact on the National Australian Bank and its operations. Change in tariffs and tax rate i.e. related to the bank in Australia also has an impact on the National Australian Bank.
Economic
Economic factors are important because it leads to long-term effects. The banking sector is highly effected by the change in the economic factors of the world or the host country in which the organization is operating. The growth rate of the economy of Australia is a major factor that has an impact on the bank (Rastogi&Trivedi, 2016). Apart from that the inflation rate and unemployment rate in the country also effects the activities of the bank. Economic factors are important because it leads to long-term effects. Skilled workforce in the banking industry is one of the economic factor that has an impact on the National Australian Bank.
Social
People living in any particular communities have several ways of behaving. This human behaviour has a huge impact on the operation of the bank. Cultural expectations, beliefs and norms of the country in which the organization is operating is considered as the social factors. Entrepreneurial spirit among the people of Australia is moderate. This is one of the major social factor that has an impact on the selected organization.
Technological
In the current scenario it can be seen that technology is evolving significantly. Technology has a considerable impact on the cost structure in the entire banking industry. Several technological factors also have an impact on the entire value chain structure of this banking industry.
Major Risks
Banking industry across several parts of the world faces major risk. There is no exception in case of National Australian Bank. Among several risk, credit risk is the significant risk that might be faced by the bank. It is often reported that success of any bank is dependent upon the effective management of the credit risk (Kolapo, Ayeni&Oke, 2012). When the borrower fails to repay the loan being borrowed it is known as credit risk. This risks can have a major impact on the National Australian Bank. Credit risk may affect the profitability of the bank. With the decrease in profitability, further decisions on the development of the bank cannot be taken by the management team of National Australian Bank. This is how credit risk affects the decision making process of the selected bank.
Furthermore, liquidity risk is also another major risk that can be faced by National Australian Bank. When any business entity or individual investors fails to pay the short-term debt it is known as the liquidity risk. Funding liquidity is considered to have major role in the history of the banking industry across the world (Drehmann&Nikolaou, 2013). Liquidity risk will have an impact on systematic decision making. When important factors are considered by an organization to undertake any decision it is known as systematic decision making. Therefore, if National Australian Bank undertakes an organized approach to make decisions might get affected due to liquidity risks.
In addition to this, the current global pandemic has affected the economic condition of the entire world. Due to decline in the major economic factors this can also be considered as the major risk that might be faced by the bank. Decisions related to enhancing customer experiences and satisfying the internal stakeholders is getting affected due to this risk.
Business Practices Several business practices are adopted by NAB and these practices are supported by the corporate governance framework. The following part focuses on discussing the business factors.
Strategic planning and operational planning
The main objective behind adopting this business practices by NAB is to achieve the long term and short term objectives of the organization. Strategic and operational planning has a positive impact on the decision making process of NAB (NAB, 2020). It is helping the management team of the organization to align the human resources, process of operation and technology which will further help the bank to fulfil the objectives.
Management of risk and compliance
The main objective of this business practice is to help the organization manage the above mentioned risk or uncertainties within the organization. Effective risk management will help NAB undertake decisions related to the development of the organization without any hindrance (NAB, 2020c). There is a set of policies that have been implemented by the management team of NAB. It is the responsibility of the organization to see whether these sets of policies are followed and obeyed by the employees within the organization. This is the reason compliance have been included in the business practices.
Managing the experiences of the customers
Customers are considerably the important stakeholders of any entity. Relationship with customers through enhancement of their experience is important because it helps in driving the firm’s value (Kumar, 2010). NAB focuses on managing the experiences of the customers so that it can help the bank to increase its relevant financial performance. The management team of NAB focuses on taking decisions that are related to customer relationship improvement (Klaus & Maklan, 2013). Therefore, it can be said that this business practice can have a major impact on the decision-making criteria of NAB.
Functional Departments
The following section discusses the functional departments of National Australian Bank. Employees within the organization looks after specific functions within the organization. These specific functions are carried out under the functional departments.
Human Resource Management
Managing the human resources is one of the major functional department of NAB. The people of NAB work with all the key advisers of the bank to create a value within the organizational culture (Chuang & Liao, 2010). The main objective of this functional department is to motivate the employees within the organization so that they can give their best in the workplace.
Finance
NAB has several finance activities in group. The activities include investors, debt funding, management of capital and many more (NAB, 2020d). The main objective of this functional department is to manage the financial condition of NAB like the liquidity position of the bank, funding and many more.
Technology and Enterprise operations
In the current environment of the business, integration of advanced technology is important. Technology has made the process of business operation fast and simple (Dauda & Lee, 2015). Technology which is integrated in the core business activities of the organization is looked after by this department. Cyber-security is also one of the major responsibilities of this functional department. Information of the bank is protected from cyber threats by this department. Apart from that enterprise control, processing of the back office, management and procurement of the property on behalf of the bank is also controlled by this functional department of the organization.
Conclusion
With the rapid growth in globalization, companies are facing intensive competition in the contemporary business world. Along with opportunities of expanding into new markets, they are also facing risks and threats from such external environments that extensively affect their performance and decision-making. The report study has thus evaluated the importance of identifying such external factors possessing potential threats to the National Australia Bank. In this regard, it has analysed the governance structure of the company, identified external environmental factors of political, social, economic and technological, recognized major risks and the business practices and departments that influence its performance.
References
CHUANG, C. H., & Liao, H. U. I. (2010). Strategic human resource management in service context: Taking care of business by taking care of employees and customers. Personnel psychology, 63(1), 153-196.
Dauda, S. Y., & Lee, J. (2015). Technology adoption: A conjoint analysis of consumers? preference on future online banking services. Information Systems, 53, 1-15.
Drehmann, M., & Nikolaou, K. (2013).Funding liquidity risk: definition and measurement. Journal of Banking & Finance, 37(7), 2173-2182.
Ho, J. K. K. (2014). Formulation of a systemic PEST analysis for strategic analysis. European academic research, 2(5), 6478-6492.
Klaus, P. P., & Maklan, S. (2013). Towards a better measure of customer experience. International Journal of Market Research, 55(2), 227-246.
Kolapo, T. F., Ayeni, R. K., &Oke, M. O. (2012). CREDIT RISK AND COMMERCIAL BANKS'PERFORMANCE IN NIGERIA: A PANEL MODEL APPROACH. Australian journal of business and management research, 2(2), 31.
Kumar, V. (2010).Customer relationship management. Wiley international encyclopedia of marketing.
Miglani, S., Ahmed, K., & Henry, D. (2015). Voluntary corporate governance structure and financial distress: Evidence from Australia. Journal of Contemporary Accounting & Economics, 11(1), 18-30.
NAB, 2020a. About us. Retrieved from https://www.nab.com.au/about-us
NAB, 2020b. NAB 2020 Corporate Governance Statement. Retrieved from https://www.nab.com.au/content/dam/nabrwd/documents/reports/corporate/2020-corporate-governance-statement-pdf.pdf
NAB, 2020c. Corporate Governance.Retrieved from https://www.nab.com.au/about-us/corporate-governance
NAB, 2020d. Work with opportunity. Retrieved from https://www.nab.com.au/about-us/careers/our-businesses#:~:text=Our%20key%20services%20include%20technology,working%20in% 20Technology%20at%20NAB
Rastogi, N. I. T. A. N. K., &Trivedi, M. K. (2016). PESTLE technique–a tool to identify external risks in construction projects. International Research Journal of Engineering and Technology (IRJET), 3(1), 384-388.
