Commonwealth Bank Business Report Essay

Section 1 Executive declivityyCBA has put record sugar of $8.68 zillion dollar although the company is facing royal delegation inquiry with regard to pecuniary Planning scandal (Yeates 2014). At present, CBA is a dominant leader in the retail-banking field across the Australian pecuniary go effort with reward charge alternate due to its largest customer base in Australia with its disruptive engine room (Rose 2014). However, it is important for CBA to spend in service improvements and innovation to declare its current food market leadership position. therefrom to identify the victory factor so-and-so CBA, it is important to assess Australian monetary intentness as a t reveal ensemble to examine the attractive features of Australian Banking vault of heaven and the internal strength of CBA to clarify its militant advantages and capabilities.Industrial life cycleAustralian pecuniary industry has exhibited the characteristics of shakeout stage lifecycle stages (Shapiro 2014). In shake out stage cycle, contestation and price-war between fiscal institutions grant step up since mammoth cardinal banks are compel discounts on variable cheer place available to a broader range of borrowers and heavy(p) their fixed vagabonds on owe offers (AAP 2014). Since then, services offered by big four banks become difficult to contraryiate separately other and this has helped the customers to broaden their option to select selective acquisition with the major(ip)(ip) banks. encourage analysis ordaining explain CBAs clients and competitors berth change due to industry evolution and its regional expansion strategy. Then, the raise report will analyze the causation behind CBA to attain premium stock price over competitors and its ethical meaning in financial industry.Section 2 Environmental outlineExternal AnalysisTo analyze the external industrial surround that lead CBA to digest up of competitors, overall Australian pecuniary in dustry will need to be analyzed in term of porters louver forces followed by PESTLE model to prevent how the warlikeness of the Australian Financial environment and macroeconomics factors cast changed at heart the industrial structure (Thomas 2007).PESTLE ModelPolitical-LegalConservative supervisory of APRA, which approached more intensive than the Basel II minimal requirement, has assisted Australian Financial Institutions to urinate minimum impact during the 2008 GFC rate of flow (RBA 2014). Moreover, quaternion Pillar Policy which prevents mergers between Australians big four banks to chief(prenominal) competitive financial environment at low find had alike protect the Australian Banking System from the worst of 2008 GFC (Durie and Gluyas 2009). Consequently, Australias steadfast and dynamic financial policies throw off favoured sustainable growth even in the hard cadence to former regime owned incumbent CBA to withstand on practice from scrappy competitors under a well-regulated financial environment (Brisden 2012).EconomicalDuring the pre GFC time, RBAs interest rate has change magnitude from 5.50% in 2000to 7% in 2008 (RBA 2014). These inclining rates eat up favored big four banks during the crisis period since the high gear interest rates increased the banks deposit and helped Australian Banks to fund their debt in the hard time (Kerr 2011). Beltratti and Stulz (2009) too stated that the larger banks within strict regulations with more deposit funding at the end of 2006 had significant high return during the GFC. Therefore, during the crisis, the effect of GFC on Australian Financial Institutions were considerably low canvas to other developed economies and CBA had also came through with(predicate) the economic turmoil with salubrious deliver the goods in deposit dowry by delivering $4.72 billion full-year net profit in 2008 (Leyden 2009). This has clearly showed that favorable Australian efficient scape has favored CBA to retain premium assign over competitors in home and pre GFC periods.TechnologyEyers (2014) stated that Fintech (Financial Technology) scene is expanding promptly in world financial centers. Financial Technologies are also challenging live business models of financial institution since non-traditional players in Australian financial sectors are supplement new innovation to deliver negotiable services to consumers in a more convenient way (Wade 2014). However, CBA is operating efficiently in the dynamic technological environment. This is because, CBA has set its strategy to capitalize on the disparity between its three big rivals by injecting $1.1 billion upgrade to its core banking constitution and invest $300 million a year in the high-tech modernization program (Smith 2012). So, this has clearly clarified that technology is one of the factors that lead CBA in a dynamic business environment to stay two to three years frontwards of competitors (Faherty 2013).Porters fli pper forcesNext, Porters 5 forces will be used to determine the financial industrys profitability, which influence over the success of CBA in Australian financial market.The little terror of new entrantsNowadays, the digitalized financial system appears to be reaching maturity and every major big four banks are utilizing different channels of entrants to capture the market share (Eyers 2014). Consequently, there is a high scourge from competitors in financial market beyond APRAs super regulatedfinancial systems since potential competitors from overseas and domestic (e.g woolworths/Coles) could have used technologies to offer virtual and bodily financial services in Australian Financial Market (Eyers 2014). Since then, this could eventually dispute the growth of CBAs physical banking in the long run. However, CBA is still a major incumbent in a financial industry, which captures majority of market share with strong domestic presence in Australia (CBA 2014). talk terms power of c ustomersIn Australian Financial industry, there is a high dicker power of customers since Australian major big banks have brought similar financial packages with competitive rates to expand their market share in a voiceless market. As Australian market is favoring customers to bargain on the best rate, CBA has dynamically influenced the bargaining power of the market by offering an aggressive rate at low risk to itself for such customers by dropping its five years fixed home impart rate to record-low 4.99% in 2014(Yeates 2014).Rivalry among existent competitorsTodays, the financial market in Australia appeared to be reaching maturity. Mason (2014) stated that financial industry in Australia has developed at compound annual growth rate of 13% over the past cristal and ranked among the most profitable banks in the developed world (Australian Trade Commission 2011). Nevertheless, Australian Financial industry is considered as Red Ocean since big four banks could potentially face mor e mortgage competition each other for the concentrated market share (Janda 2014). Thus, if market leader CBA failed to maintain its current competitiveness in an aggressive market, the market share could be missed out and it will be given away to competitors.Section 2.2 versed AnalysisStrategic ResourcesHarrison (2014) stated that combine of tangibles and intangible assets of which control by the CBA could be identified as key resources to commit its strategical capabilities. Resources include teamwork among managers and Past/ invest Chief executive officers, firms reputation among customers and its strong balance winding-clothes has helped CBA to attain premium share price over competitors. The possession of CBAs strategic resources ahead ofcompetitors has favored its long-term survival and alleviated its competitive advantage. The strategic resources of the CBA will be demonstrated by exploitation the value grasp framework.Value Chain AnalysisPrimary activitiesOperation fa cultySmith (2012) stated that CBA appears to be ahead of competitors in its IT development strategy and this has bring on CBA to attain not only make up and operational efficiency but also improve customer satisfaction. As a result, due to its new modernization in core banking system with best in class online banking platforms, CBA has attained the biggest improvement in its customer satisfaction score out of big fours and achieved Money magazines best innovative awards in 2014(News 2014). Moreover, CBAs strong shareholder with a alert balance poll has also sceptred full funded acquisition from internal and external stakeholders (Letts 2014). CBAs significant balance sheet growth with high earning assets and deposit has charge organic capital growth and investors confidence in investment. Therefore, it is assumed that strong financial strength with high profit return has amplified CBA to stay ahead rivals and trades its shares at premium over their domestic competitors. outgoi ng ActivitiesCBAs strong acquisitions with Aussie Home give and concrete financial brokers network have improved its home loan hand over to the new customers in the financial market (Elsworth 2014). Moreover, CBAs 1000 plus immense branch network in Australia with highly efficient technology platform has also aided CBA to gain solid netbank customer loyalty bases in Australia (CBA 2014).