Business Case Analysis Of Commonwealth Bank Of Australia

Question

Task:
Write a detailed report presenting the business case analysis of Commonwealth Bank of Australia.

Answer

Introduction
The study presents a business case analysis of Commonwealth Bank of Australia. Every organization needs to focus on the importance of the management and the strategies that will assist them in making future decisions direly. These strategies could help the company to utilize the skills of its employees and develop the creative approach that can govern the changes and affect the organizational structure and how these governance structures bring changes in an organization. Also, the environmental factors will be the major part that could change the business. Here become the importances of the designing of the governance strategies that could cope with the risk of the company have been assessed and end up by providing the recommendations.

The commonwealth bank of Australia has been founded under the banking Act in 1911 and started operations in 1912 and empowered to conduct the banking business and savings. The common Wealth Bank of Australia is an organization in the financial sector having its presence in the UK, New Zealand, Asia, and the USA has a huge domestic presence as well. The bank tends to remediate the strategies and business practices by improving the structure of the organization by focusing the efforts and provide better services. The CBA serves around 16.1 million customers across the world, out of which 6. 5 are the digital customers. The organization also has the biggest ATM network in entire Australia (Booth, C., & Rowlinson, 2005)

Business Governance Structure
The aim of the commonwealth bank Australia and its bodies are related and committed to creating sustainable but long term value by making improvements in the financial well-being of the communities and customers. In this regard, the focus of an organization is to strengthen the governance to achieve better risk outcomes and customers. So the bank focus on corporate governance and its associated arrangements, which are in practice, which are regularly refined in the shed of new rules and regulations and evolve around the expectations of the stakeholders around the dynamic environment in which the bank is operating. The corporate governance describes the major governance and its arrangements which are in practice and followed by the recommendations that have been given by the corporate governance council principles. In this regard the board has appointed the CEO and set the objectives of the bank with the managerial input from the management and oversee the performance of the management, its remuneration, and the governance framework as well. After recognizing the processes of business, which are the nucleus that could derive the goals of sustainability, CBA had placed the greater value in the enterprise-wide process management and tended to support the multi-level and the multi-faceted Business Processed Management governance (Söderlund, 2004).

The governance strategy is different in a way that the organization is not unfamiliar with governance. But the addition in the integration of the horizontal layer that exists and entrenches the vertical but functional governance framework had required the strategic application and design. Such governance is applied to the CBA to ensure the strategy of the process, designing process, and the associated with the changes and design (Miroshnik, 2002).

• However, to design is to oversee and to steer the performance process management.
• Making approval to prioritize the initiatives that could ensure the end to end process which is the driving process towards the strategy.
• To make sure about the process design, which is in line with the standardization and simplification goals?

The governance process is different from other organizations in a way that evolves around the iterative process and efforts—like the organization had dedicated the roles for the business process management which span over the different levels of organization from a senior executive role like the Chief process Officer and establish the Process architecture team that has been led by the CPO. The team develops and structure architecture. However, the systematic structure has been prioritizing the process having its high and medium impact on the processes along with process owner and sub process owner for the priority processes. In this regard, the Process architecture team has been created to process reference architecture by having clear taxonomy that could provide consistent set processes with the best practices. For doing so, the bank has appointed the team of the process specialist led by the general manager and tasked to establish the process of business management. With such support, the Executive committee supported the role of the CPO and had created the first process of the architecture governance team (Sousa, R., & Voss, 2002).

Environmental Analysis
The internal, as well as the external factors both, held responsible for affecting the company's decision processes and the decision making. In this regard, the external environmental factors mainly include the PESTEL analysis, which influences the performance and the decision making process. On the other side, the internal environment has been assessed by the SWOT analysis, which could greatly affect the decision making and performance of the CBA (Frederick, 2002).

The external environmental Factors, commonly known as the macro factors, have a greater influence on the company's decision-making process and performance. This can be attributed to the PSTEL analysis, which is as below:

Political
The importance of political factors plays a vital role in determining the factors that could have a greater impact on the CBA and its long term profitability in the market. The bank is operating in many countries and tends to expose itself in a different political environment.

The bank attains accomplishment and success in a dynamic industry across nations and it assorts the systematic risk in the politics environment (Shaw, 2011).

• The political significance and dependability on the banking sector in the nation
• The chance related with the intrusion of military
• Administrative and Corruption level
• Interference of organization in the banking sector
• The lawful system for the implementation of agreement

Economic
The variables identified with the macro economy like the sparing, inflation, foreign exchange rate, and the economic cycle that could decide the total interest and the total venture choice. While discussing the small scale side, the natural components like the standards of rivalry and the upper hand of the firm can utilize the monetary variables of the bank like the development rate and the other financial circumstance of the bank (Beehr, 1998).

Social
Culture and society have the ways that differently impact the organizational culture in such an environment. However, the attitudes, beliefs, and the shared trust of the population had played a greater role in the CBA. It will influence the decision-making process and the performance of the company, which could be changed accordingly.

• The skills and associated level of the population
• Structure of the class and the hierarchy of power.
• Education level.

Technological
Technology is considered a disruptive measure that could affect the company's performance. The company should not rely on the company, but the industry ad speed up the disruptions of the technology. The decisions of the company have been interrupted by the slow speed of coping with the disruptive speed of the technology, which has a greater effect on the company.

• The current technological development by the CBA and its competitors.
• The impact of technology offering the services.
• The cost structure in the bank
• Value chain structure

Environmental
As the bank is operating in different countries and has a different norm having different environmental standards which can have a greater impact on the organization in different markets. As operating in the same country has some different laws which are different in the different environmental liability laws as well (Goodstone, M. S., & Diamante, 1998).

• Change in climate
• Weather
• Regulating laws for environmental pollution
• Waste management in banking.

Legal
The legal framework is not only robust that could protect the intellectual property rights in an organization. The firm should evaluate carefully while entering the market. However, these legal factors of CBA could lead to affect the performance and decision-making process of an organization. These may include:

• Law of discrimination
• Anti-trust laws
• Patents and copyright laws
• Consumer protection laws.

Risks that affect the decision making
No organization is free of risk, whether it is performing well in its sector or not. Here are the top three risks that the commonwealth bank Australia are going through:

The Financial Risk
The financial risk that is exposed by the commonwealth bank Australia is the risk associated with the market and is commonly called the systematic risk. The Australian Investors Association states that shares are volatile, and the prices are randomly fluctuating due to the movements in the market factors. So it is also called the unpredictable prices and the unforeseeable, which eventually drops to zero levels (Donovan, J. J., & Radosevich,, 1998).

Short-term interest securities and Long term fixed interest securities
The other risk which the CBA is following is the risk of the interest rate. It is the financial risk that can cause the money value to fall and also cause bonds that have less value due to an increase in the interest rates. This could tend to affect the decision making of an organization (Johns 1998).

US Shares
The other major risk that is associated with the CBA has been faced by the investment in US shares. It will not expose the credit risk or the market risk but can lead to foreign exchange risk or the country risk.

Recommendations

• To avoid the risk, there is a policy of hedging which could expose the investment where it will be necessary as the CBA could face the risk of equity-like the systematic risk, inflationary risk, and the risk of liquidity. These risks could lead to damages if the market price of the share drops. So the most important remedy to avoid the risk.
• Settlement through the intermediaries could lead to a reduction in risks.
• Appropriate governance strategies are needed to avoid risks.

Conclusion
Hence, the commonwealth bank Australia has been accounted for the financial services by the appropriate governance decision. This could have a greater impact on the company. Also, there are some of the environmental factors which could greatly impact the performance and decision making of the company, which has been attributed to the PESTEL analysis, while the tops risks of the company have been assessed and end up to the recommendations.

Reference List
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Booth, C., & Rowlinson, M. (2005). Management and organizational history: Prospects. Management & organizational history, 1(1), 5-30. Retrieved from: https://dl.acm.org/ft_gateway.cfm?id=1114221&type=pdf

Donovan, J. J., & Radosevich, D. J. (1998). The moderating role of goal commitment on the goal difficulty–performance relationship: A meta-analytic review and critical reanalysis. Journal of applied psychology, 83(2), 308. Retrieved from: https://psycnet.apa.org/record/1998-01190-014

Frederick, H. (2002). Individual and collective entrepreneurship amongst the Pakeha and Maori of Aotearoa/New Zealand. New Zealand journal of applied business research, 1(1), 77-92. Retrieved from: http://dro.deakin.edu.au/view/DU:30030834

Goodstone, M. S., & Diamante, T. (1998). Organizational use of therapeutic change: Strengthening multisource feedback systems through interdisciplinary coaching. Consulting Psychology Journal: Practice and Research, 50(3), 152. Retrieved from: https://www.researchgate.net/profile/Thomas_Diamante/publication/285669688_Organizational_ use_of_therapeutic_change_Strengthening_multisource_feedback_systems_through_ interdisciplinary_coaching/links/574efc9608aebb988041f7e8/Organizational-use-of- therapeutic-change-Strengthening-multisource-feedback-systems-through-interdisciplinary-coaching.pdf

Johns, G. (1998). The nature of work, the context of organizational behaviour, and the application of industrial-organizational psychology. Canadian Psychology/Psychologie canadienne, 39(1-2), 149. Retrieved from: https://psycnet.apa.org/record/1998-04544-014

Miroshnik, V. (2002). Culture and international management: a review. Journal of management development. Retrieved from: https://www.emerald.com/insight/content/doi/10.1108/02621710210434647/full/html

Shaw, J. D. (2011). Turnover rates and organizational performance: Review, critique, and research agenda. Organizational Psychology Review, 1(3), 187-213. Retrieved from: http://www.polyu.edu.hk/mm/jason/doc/Shaw%202011%20OPR.pdf

Söderlund, J. (2004). On the broadening scope of the research on projects: a review and a model for analysis. International Journal of Project Management, 22(8), 655-667. Retrieved from: https://www.researchgate.net/profile/Jonas_Soederlund/publication/248345132_On_the_broadening_ scope_of_the_research_on_projects_A_review_and_a_model_for_analysis/links/5a29bac70f7e9b 63e5352d1f/On-the-broadening-scope-of-the-research-on-projects-A-review-and-a-model-for-analysis.pdf

Sousa, R., & Voss, C. A. (2002). Quality management re-visited: a reflective review and agenda for future research. Journal of operations management, 20(1), 91-109. Retrieved from: http://www.untag-smd.ac.id/files/Perpustakaan_Digital_1/BUSINESS%20Business%20Performance%20Measurement.pdf#page=161