The purpose if this report is to identify and evaluate Australia and New Zealand Banking Group Limited (ANZ) development, issues and strategies for future in the Chinese banking market.
The purpose of this report is to help Australia and New Zealand Banking Group Limited's (ANZ) determine which modes of entry to choose to enter the banking industry in China and how to implement these strategies.
1.2 Scope
The scope of this report is more towards strategic management for international business which includes internationalization process, multinational configurations, strategies and also why it is important and many more.
The scope of this report will be to analyse ANZ's internal environment, China's country attractiveness to ANZ and the Chinese banking sector.
1.3 Method
For this report, research on articles from textbooks, journals, magazines as well as online articles will be carried out to obtain the relevant information to meet the objective or purpose of the report.
1.4 Limitations
The limitations of the report are considerably minimal, relating mainly to the rigid time frame set for the completion of the submission.
1.5 Assumptions
It is assumed that there are other strategic information which is also suitable for this report such as current information and research of ANZ.
1.6 Background
The Australia and New Zealand Banking Group Limited, or ANZ, is the third largest bank in Australia. Australian operations make up the largest part of ANZ's business, with commercial and retail banking dominating. ANZ is also the largest bank in New Zealand, where it operates two brands, ANZ and the National Bank of New Zealand. ANZ also owns ING through the buy-out of ING's fifty one percent stake in their Australian and New Zealand funds management joint venture. In addition to operations throughout Australia and New Zealand, ANZ also extends to twenty-five other nations.
2.0 Discussion
2.1 SWOT Analysis
2.1.1 Strength
2.1.1.1 Good Corporate Strategy and Leadership
One of the strengths of ANZ is that they are one of the largest companies in Australia and New Zealand, being the third largest bank in Australia and largest bank in New Zealand. By being dominant in Australia and New Zealand, ANZ has been able to acquire enough expertise and capital in building a brand image for itself in its local market and is therefore able to expand to the overseas markets using its core competencies. According to BRW (2007), ANZ Bank was the only Australian company among 20 companies chosen for the first global 2007 Top Companies for the Leaders list. The list comprised of 560 companies which were assessed on their leadership practices, company reputation, business performance and leadership culture and values.
ANZ's key differentiating factors to its major competitors were its strategy to grow its presence in Asia. For example, ANZ's strategies were well developed and involved establishing partnerships with local partners which will enable them to collaborate easier in China. ANZ has established strategic partnerships in two of China's key emerging regions like the Shanghai Rural Commercial Bank and the Bank of Tianjin.
2.1.1.2 Ability to Provide Better Services to Improve Customer Responsiveness by Targeting Niche Market
Apart from having a strong background, ANZ also understood the need of providing better services to inject customer satisfaction in order to capture more market share from their local competitors. Moreover, ANZ also provides better services in China compared to other local Chinese banks which recorded very low customer satisfaction levels. They provide excellent services such as shorter waiting lines, educating staffs to be knowledgeable and higher quality branch in order to capture more market share. While other foreign banks have tried to enter the bond and equity business in China, ANZ's strategy has been more focused on consumer and corporate banking, reflecting its strengths in Australia (Euroweek, 2009).
2.1.2 Weaknesses
ANZ's objective of becoming a leading foreigh bank in China by doubling the amount of branches it has there may be hindered by its ability to pick up local talent, faced with a tough battle by other foreign banks. It will be challenging for ANZ to find hire relationship managers to expand the firm's fledging client base because of a shortage of candidates who have strong local networks and because rival foreign commercial banks are seeking relationship managers at the same time also. Although ANZ is the third largest bamk in its home market and is rapidly strengthening its Asian presence in countries like Singapore, it does not currently have the candidate pulling power of larger international firms in China. Therefore to attract retail people, ANZ may have to pay them above market rate wages, as it is already doing for its corporate banking staff (Mortlock, 2010).
2.1.2.1
2.1.3 Opportunities
2.1.3.1 China as the Emerging Market
Due to the economic slowdown in United States and Europe, China is already the next potential market in the banking sector. Many competitors have also targeted the emerging Chinese market in order to capture market share in the undeveloped banking sector. For instance, Chinese savings rate for individuals are significantly higher than in western countries with an annual savings of RMB 6,743,605 in 2009 (Euromonitor International, 2010). Moreover, the large economic growth achieved in China has produced an increasing number of individulas exceeding the traditional measures of high net worth. Therefore, there is the opportunity for ANZ to focus more on Wealth Management Services and adapt them to the culture of China.
2.3.1.2 Opportunity to targeting the niche market under the WTO policy
Helped by WTO to eliminate geographic restrictions, ANZ can capitulate on the opportunity to expand their business into the Chinese market. ANZ can provide private banking, a service for wealthy individuals and serve this segment with the highest level of service and performance as the country opens up under the WTO. This service is not offered by most Chinese banks and offered only by a few foreign banks. Due to ANZ's superior processes, procedures and internet platform that can be easily transferred to the Chinese market from their Australian and other Asian operations, ANZ will have a clear advantage in this segment as wealthy individuals will look to the prestige provided by the foreign banks compared to local banks. The company should also seek out offices in higher end districts that present a corporate image of wealth and prestige to attract the rich customers.
2.1.4 Threats
2.1.4.1 Fierce Competitors from the Local Banks and First Mover Advantage by Foreign Banks
Mounting competition from the local banks such as the Bank of China will make it impossible for ANZ to replicate traditional services in China as the local banks control more than half of the country's banking assets. ANZ also faces stiff competition from other foreign banks that have already made an impact in the Chinese market. Banks like Citibank and HSBC banks already have a strong business presence owing to their first mover advantage which enabled them to capture a significant market share first. This will prove a stumbling block to ANZ if they want to create a big impression in the Chinese market.
2.1.4.2 The Chinese Government's Restrictions pertaining to the banking industry.
One of the problems of the Chinese banking industry is its high protectionism. There are official ceilings on foreign bank ownership of a Chinese bank; the ownership by any individual foreign bank in a Chinese bank cannot exceed 20 percent and the combined ownership of foreign banks in any one Chinese bank cannot go beyond 25 percent. This policy forces foreign banks to allow domestic banks access to their capital and technology without benefitting from majority control. Futhermore, there are two bodies of legislation co-existing in China, one at national level and the other at local level. The former is published and available for consultation by foreigners but the latter is not published creating confusion about what foreign companies have to expect and giving the local government the power to design laws on an ad hoc basis. It is also important to note that the mere enactment of laws does not necessarily translate in enforcement in China and can be biased by corrupt arrangements or local balance of interests (Vellat & Carpenter, 2008).
Correct William's SWOT
Do executive summary again
Alternative solutions part- establish link between part a and part b.
Correct implementation
