Commonwealth Bank is a multinational Australian Bank headquartered in Sydney. Along with Australia, Commonwealth Bank is situated in various other parts of the globe such as New Zealand, Asia, and United States and in United Kingdom. Initially, it was founded by Australian Government but later on it was fully privatised in 1996 on listed on Australian Stock Exchange in 1991. Currently, bank has more than 1100 branches along with 51,800 employees across worldwide locations (Commonwealth bank, 2018). Commonwealth Bank is one of the largest companies in terms of revenues in global banking industry. Success and growth of an organization is dependent over its business model, business ethics and the strategies adopted to match up with the latest trends of market, to fulfil its customer’s needs, as well as to build an effective image amongst the competitive business environment. In this business essay, business model canvas of Commonwealth Bank will be discussed. Along with the business model, disruption and innovation will also be discussed in relation with the analysis of threats and opportunities of utilisation of smart-connected devices will also be covered under this business essay. This essay will help to determine the effectiveness of business model and smart-connected devices in relation with the Commonwealth Bank.
Business model and disruption
In order to gain success and growth for a longer period of time, organizations are required to adopt appropriate business model and disruptive techniques. Both these terms plays vital role in an organizational life-cycle. Business model describes the procedure of how an organization delivers, creates, and captures the value in correlation with the social, economic, cultural and in other contexts. Construction of business model is a crucial segment of business strategies (Osterwalder & Pigneur, 2010).
Disruptive innovation is used in the businesses to form new markets and value network and disrupts existing markets and value networks in order to enhance the productivity and efficiency. All innovations are not disruptive but all disruptions are tending to be innovations. For example: when automobiles were initially introduced in the market, it did not disrupt the market of horse-down vehicles. But when mobile phones were introduced in the market, it disrupted the whole market of other medium of communication such as landline phones, etc. It is known as disruptive innovation (Porter & Heppelmann, 2014).
Business model canvas framework is introduced by Osterwalder, et al. (2011) in order to combine all the components of a business together. This framework acts as the vital strategy included in the strategic management which is mainly used for developing business models. This framework includes all crucial elements of business such as product’s description, value propositions, resources, customers and other required resources (Osterwalder, et. al., 2011). Another aim of the business model is to perform well and in an effective manner in dynamic business conditions. All the functionalities are managed in the most appropriate manner which is required to obtain expected outcomes. Along with this, business model also helps the organization to make optimum utilisation of the available resources with the objective of delivering value to its targeted demographics (Porter & Heppelmann, 2015).
Along with the business model canvas framework for building the effective and result oriented business model, disruptive innovation model has also been adopted by the companies nowadays with the objective of uplifting the market image along with gaining competitive advantage. Adaptation of disruptive innovation leads to generate positive outcomes and develops unique value dimensions to serve the potential customers in the most appropriate manner (Guttentag, 2015). Some of them value dimensions served to the customers are simplicity, reduced prices; enhance quality, convenience, etc. Disruptive innovation brings unique ways for the organizations to move towards success, growth and other variables which are necessary to attain competitive advantage in the target market. In relation with the disruptive innovation technology, smart-connected devices are also growing rapidly in the market. These devices are assisting the companies to move towards automation from manual work procedure. Apart from this, smart-connected devices reduce chance of men-made errors and other glitches which could reduce the efficiency of an organization. With the help of disruptive technology, organizations are using smart-connected devices in their operations with the objective of enhancing the efficiency and productivity of the organization (Christensen, et. al., 2011). Software, sensors, and other technological devices which ease the organizational functionality and increase the efficiency of organization are known as smart-connected devices. Technologies help the organization to make their operation effective and quick and the same goes with smart-connected devices. These devices form a way between the customers and organization in order to share information, raising a query, etc. The data collected from these products can be then analysed to inform decision-making, enable operational efficiencies and continuously improve the performance of the product (Chesbrough, 2010).
Numerous products and services are being delivered by the Commonwealth Bank to its customers. Services such as financial services, investment schemes, insurance plans, saving, current and other types of bank accounts, broking services, retirement and maturity schemes, etc. are provided by Commonwealth Bank. Major reason of organizational success and expansion in various parts of the globe is adaptation of trending techniques and effective business model (King & Baatartogtokh, 2015). Apart from this, Commonwealth Bank’s success could also be measured by the utilisation of smart-connected devices in their operations. Certain disruptive innovations made by the team of Commonwealth Bank are smart machines, Block-chains, Internet of Things, big data and smart-chipped cards. The smart-chipped cards have unique features and provide various advantages to its users. Generally, debit cards are being used for transacting and shopping purposes but debit cards issued by Commonwealth Bank are less with unique safety features. These safety features saves customers of bank from fraudulent activities as well as in the scenarios of card lost, it could be deactivated easily by a mobile application only. These are certain crucial innovations made by Commonwealth bank to enhance its effectiveness (Demil & Lecocq, 2010).
It has been observed that smart-connected devices bring various opportunities and threats for the organization. In relation with the adaptation of smart-connected devices, Commonwealth bank has introduced smart machine in their operations which enables the bank to provide unique financial services to its potential customers across the globe. The smart-machine is introduced with the help of sensors and advanced technology which enables the bank to manage and record the information regarding transactions made by its customers (Fadlullah, et. al., 2011). This machine has the capability to manage all the branches of banks interlinked with each other. Along with these services and facilities, Commonwealth Bank also provide online banking, online account opening, and other crucial services to its customers. With the help of these technology and advancements, organization has attained growth related attributes along with an impressive growth rate (Christensen, Raynor & McDonald, 2016).
Along with the opportunities to grow and prosper, there are various challenges and threats linked with the usage of smart-connected devices. One of the biggest challenges is dependency over technology and automation. Due to this, manual processing of functionalities is getting declined whereas users also face certain challenges such as losing the passwords for online banking. Apart from this, old aged people are also facing challenges in order to make use these technologies (Sun, et. al., 2016). In relevance with these challenges, it is required for the management of bank to provide adequate information of using these technologies along with the procedure of recovering the passwords. The major threat of smart-connected devices is the fraudulent activities because card lost; leakage of confidential credentials of customers could lead to big loss for the bank as well as for its users. Thus, it has been recommended to the bank and its users to keep their confidential credentials in safe and secure place through which these technologies and advanced could be utilised in an optimum manner (Yu & Hang, 2010).
· Firms issuing credit cards
· Subsidiary companies in other parts of the globe
· Local clients in other countries
· Security providing firms
· Vault services providing firms
· Retail banking
· Investment schemes
· Credit card facility
· Insurance plans
· Risk evaluation techniques
· Quality financial services
· Reliable investment schemes
· Customer-centric retail banking services
· Brand equity in banking sector, Australia
· Practical growth
· Provides services to local and small banks and financial institutions
· Renders quality services to its customers (Harwood, et. al., 2014).
· Practice various functionalities in relevance with making customer relations strong
· Customer centric approach
· Takes customer feedbacks on priority
· Brand image
· All customer segments
· Business organization, government, and all people
· Credit card users
· Wide and effective distribution network
· Operates from more than 1100 branches worldwide
· Brand image of being one of the largest banks in terms of revenues, service quality, etc. across the globe
· Effective men-power
· Skilled technicians
· Own communication channels
· Official website
· Other social media platforms
· Salaries to employees
· Remuneration to financial experts
· Administrative costs
· Other financial costs
· Maintenance, security, interest, etc. fees.
· Rewards and returns
· Interest on loans
· Interest on credit card payments
· Fees for overdraft facility
· Debit card fees
· Other services fees and fees on non-maintenance of minimum balance in account.
Above discussed business canvas model is adopted by Commonwealth Bank, Australia. This model has made the organization effective enough to achieve desired goals and objectives. Along with this, it has been observed that for effective management of business practices, appropriate model, structure or a framework is required. With the help of this model, organizational capabilities could also be compared with its achievements and gaps recognised could also be fulfilled in an effective and appropriate manner
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