Essay: VTB Bank, Russia's International Business SWOT Analysis & Entry Strategies.

The report is about understanding the international business across the borders by various multinational companies. The respective company that has been taken in the report is VTB Bank, Russia wherein the current operating position that helps in understanding the SWOT analysis along with the issues that are faced by the VTB Bank.

The main aim and purpose of the report is to analyze issues along with the opportunities that are faced by VTB Bank in Russia and in other operating countries as well. The purpose of the report is to identify the control issues such as financial and accounting issues that can have great influence on the organization.

The conclusion is based on analyzing the key issues faced by the respective bank and implementing strategies relating to licensing and franchising that will help in resolving such issues faced by the bank. The recommendation would be proper implementation of strategies to increase the growth of the international business and increase globalization as well.

The report is based on analyzing the business of VTB Group Company in Russia and the effect of the international business across borders as well. It is essential to understand the nature of the business and the operation of such business in other parts of the world as well.

The main aim of the business is to analyze and review the international competitive strategy of the company along with issues related to the control of the respective company in Russia. Proper analysis has to be done as to understand the competitive strategies that can help the respective company to enter the other countries or regions. The main purpose of the report is to management of different human resources across borders as well as identifying the key issues that are threats for the respective company. The opportunities has to be ascertained as well as this will help in identifying the future opportunities of the respective company across the border.

The structure of the report includes the overview of the respective company along with design of the present organizational structure of the company as well. It will include the strategies that are essential for them to enter the other regions or countries as well.

Overview of VTB Group

VTB Group is global provider for different kinds of financial services that generally comprises of more than 20 financial constitutions and credit institutions that are operating in all the required areas of financial markets ("VTB – World without barriers", 2017). The respective company’s network that is global in nature is unique in the entire financial market of Russia. It helps in facilitating the promotion of other Russian organizations to engage into the financial markets. The majority of the shareholders of VTB Bank are Russian government and it has more than 60% voting rights as well.

The current operating position of VTB Bank is in Russia presently and they are operating in other countries as well that includes Armenia, United Kingdom. VTB Bank is operating as the parent company in other countries such as Germany as well as France. VTB is having subsidiaries along with affiliated banks in the other part of the countries that includes Angola as well as Georgia. VTB Capital has its branches in Dubai as well as Singapore that is making them work more effectively and planning to start their operations in other countries as well. According to the reports of 2015, VTB Bank is 14 million individuals along with corporate clients are using the banking services of VTB and it is increasing effectively as well (Cavusgil et al., 2014).

Review of the competitive strategy 

VTB Bank deals with the investment, retail banking along with corporate sectors in the competitive market.VTB deals with different kinds of threats along with opportunities from their competitor in the entire industry. The main competitor of VTB Bank is Morgan Stanley along with Renaissance Capital (Sakas, Vlachos & Nasiopoulos, 2014). There are different kind of threats available to VTB Bank that has to be analyzed by them in order to understand the weaknesses and strengths of the company as well.

• Leading banks in Russia
• More than 40,000 employees in the labor force (Nyberg et al., 2014)
• Operates in more than 20 countries across the world
• Comprises of retail, corporate and investment businesses

• Domestic capital marketplace is shallow in nature
• Global presence is limited in nature
• Market growth is limited of VTB Bank

• Converting the positioning of the market that is strategic in nature into return of capital that is consistent in nature
• Serves the different clients globally
• Diversifying the business and focusing on the segments that are strategic in nature

• Market is fluctuating in nature
• Increase in the administrative costs
• Threat from other global markets that are increasing
• Increasing staff costs

International Competitive strategy

Figure 1: SWOT Analysis

(Source: Brewster et al., 2016)

Organizational structure

Figure 2: Organizational structure

(Source: Created by author)

From the diagram, it can be analyzed that the present structure of the organization helps in understanding that hierarchical structure is followed in VTB Bank. Under the Board of Management, there are sub departments such as administrative, risk management along with strategy making committee. Similarly, under supervisory department there is internal audit, card centre as well as F & A department wherein all the functions of the management are taken care by them. The executive department takes care of the responsibilities that help in understanding the issues that needs to properly taken care by VTB bank officials.

There are different kinds of control issues faced by VTB Bank that are listed as follows:

• Firstly, accounting issues that includes accounting on inflationas and other problems related to indirect taxes such as VAT (Value Added Tax) and miscellaneous taxes as well on the transactions done in the business by them (Poulis, Poulis & Plakoyiannaki, 2013).
• Secondly, the financial issues that focus on the risk related to foreign exchange rate,as it is not under control of the VTB Bank and it can be control issues for the company that has to be settled properly.
• Thirdly, transaction exposure is the risk that includes impact of the exchange rates on the financial statements of the companyand it is affecting the consolidated balance sheet and financial position of the company as well (Brannen, Piekkari & Tietze, 2014).
• Lastly, the fluctuations in the exchange values can affect the business of banks,as it is unavoidable kind of risk faced by the companies.

These are the different kinds of business control issues that are faced by VTB Bank that are unavoidable in nature and it can be reduced with proper implementation of strategies that can make reduce the risk in the future. Proper precautions have to be taken by the officials as to avoid such risks in the near future (Armstrong & Taylor, 2014).

Appropriate and proper strategy will be a source for competitive advantage of VTB Bank that includes different approaches and moves to enter into the different markets successfully. VTB Bank has adopted multinational corporation strategy, as it is a successful business model that has separate laws followed by them as well (Sparrow, Brewster & Chung, 2016).

Multinational Corporation helps VTB Bank in analyzing the risk of failure involved in the business and solving as well as reducing it with proper application of strategies both in parent and host country. International firm  is another entry strategy used by VTB Bank as this helps them in starting their operations in other foreign countries as well easily without investing much capital and it will provide marketing effort as well (Storey, 2014).  

Supply chain management 

The main approach of VTB Bank helps in creating impact on the production, suppliers and customers of the bank (Gamble & Thompson, 2014). Effective and proper supply chain management is essential for VTB Bank that can support the strategy objectives such as growth and globalization along with turnaround in the financial situations of the company.

• VTB Bank uses functional expertisein order to analyze the proper way to cope with various unavoidable situations. It is essential to understand the proper way to optimize the supply chain management of the company with proper planning and controlling of the strategies by them (Beamish & Lupton, 2016).
• Integrated solutionsunderstand the constraints regarding the various operations and disciplines regarding the planning of supply chain management of VTB Bank. VTB Bank helps in optimizing the approaches of planning in the organization as to analyze the requirements and design of supply chain management (Fainshmidt, White & Cangioni, 2014).
• Principles of supply chain management are essential in nature as to understand the specific characteristics of the supply chain management of the entire sector. It helps in lifting the performance of the clients and maintaining proper balance in the organization as well.  

Proper operational control is essential to be done by the companies as to understand the procedures of the organization are in proper place in the organization or some changes are required in order to analyze such changes (Knowles, Holton III & Swanson, 2014).

VTB Bank has to adopt some operational control operations, as this will help in analyzing the strategies that needs to be adopted by them as to control such issues in the bank. Operational control is required in VTB banks to understand the sound and safe operating system (Bondarenko, 2014).

• It will help in providing acknowledgement of the growththat can help in analyzing the managerial risk involved in the company.
• It helps in analyzing the information that is generated from the transformation process in the bank to get the estimates of coststhat are required in the business.
• It helps in streamlining to minimize the costs as well as the workthat will help in finishing the tasks efficiently and quickly as well.

Management of human resources is essential to be done by the organization, as this will help them in maintaining two key components namely managing risks and people in banks. VTB Bank has implemented human resource management process in such a way that it helps in implementing planning as well as analyzing the performance of the organization as well (Wagner III & Hollenbeck, 2014).

• Planning is required to be done by VTB Bank, as this will help them in acquiring the right individuals and retaining the people in the organization as well. It will help VTB Bank in rapid technological advancement and skill up gradation as well.
• Acquiring the right individuals is essential, as this will help VTB Bank in order to gain competitive advantage in the competitive market. The company will acquire proper growth as well in the future with proper development of strategies.
• Re-skilling and trainingis essential, as this helps in continuous growth in the progress of the individuals. It will help in managing the performance of the organization as well.

Current organizational structure and control issues

Issues

• Regulatory pressure is present in VTB Bank, it is increasing presently, and VTB Bank needs to spend discretionary budget to meet up with the requirements of escalation (Cavusgil et al., 2014).
• VTB Bank does not meet expectations of consumersand they are not able to deliver the level of service to the customers that is desired and demanded by the customers as well.
• Increasing competition is creating a huge challenge for VTB Bank as they are still using outdated technologies and they are not able to cope up with the present changes that are met by the other organizations (Snell, Morris & Bohlander, 2015).

• Sustainability is one of the opportunities of VTB Bank as this helps in growth of the company along with proper maintenance of rules and regulations in the bank as well.
• Capital demand is essential for VTB Bank as increased costs are related to direct safety and it will help the economy as well. It will help in bolstering financial safety for the entire organization as well.
• Advancement in technology is another opportunity for VTB Bank as this will enhance in capitalizing the strengths of the business in the organization and keep the customers engaged as well. With proper usage of cloud platforms, it will help VTB Bank in lowering the costs of software with the help of service subscription (Cavusgil et al., 2014).
• Alternative Competition helps in establishing the trust of the customers towards the various services provided by the respective bank. It will help in creating dependable relationship with the customers for long term and it will involve changing of patterns in the operations of the bank as well.

Therefore, it can be inferred that there can be different kinds of risks that are involved in the management of VTB bank or any other financial institutions as well. However, proper strategies have to be utilized in order to analyze the issues or the threats that can influence the business of the bank and this will help them in analyzing the strengths of the business as well. The respective bank needs to stay ahead of the different trends and changes in the operations of the bank, as this will help VTB Bank to be ahead in the competition process in the future as well.

Conclusion

Therefore, it can be concluded that the operating position of the company is strong in all countries including of Russia. The existing structure of the organization of VTB Bank helps in managing the human resource management properly. VTB Bank has the operations in different parts of the world and it is trying to expand the operations in other parts of the world as well. There are different kinds of threats or issues that are faced by VTB bank but such issues can be resolved with proper implementation of strategies such as to take the competition in a positive way, as this will help them in growth of the company as well. The entry strategies namely licensing and franchising strategy helped VTB Bank in understanding the advantages of using strategies, as this will help them in introducing their business in other countries as well. Lastly, supply chain management has to be properly analyzed, as this will help them in making proper growth and globalization as well.

Therefore, it can be recommended that VTB Bank needs to adopt strategies related to the controlling of operations in the business, as this will help in analyzing the issues related to supply chain management. VTB Bank has to identify the risks that can influence their operations in the respective countries and proper management is required to increase their operations in other countries as well. VTB bank needs to analyze the opportunities in such a manner that it will generate growth and globalization in the entire economy as well.

The other recommendations suggested are regarding the operating position of the bank in other countries as well as this will help in proper implementation of supply chain management. The threats or the issues faced by the company has to be taken positively by VTB Bank, as this will help them in gaining competitive advantage in the competitive market and turn those threats into their opportunities as well.

The SWOT analysis conducted helped in analyzing the competitive advantage of VTB Bank in the entire industry. Proper competitive advantage has to be analyzed in such a manner that it will help VTB Bank in spreading their operations in other parts of the world by analyzing the threats and turning the threats into opportunities and weaknesses into strengths that will enhance their capacity to increase the sales in the entire market as well.

Lastly, the control issues has to be resolved in such a manner that it will provide the VTB Bank in resolving such issues and with the help of functional expertise it will help the respective company to conduct operations in various countries as well.

References

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