National Australia Bank Analysis Essay.

National Australia Bank Purpose

Discuss about the National Australia Bank Analysis.

Organization does not exist in the vacuum but in the ever changing and dynamic environment. For the organizations to survive and ensure sustainable growth they have to continuously scan their environments to understand the critical aspects that might hamper their activities. This demands an organization to acquire and utilize information about relationships between trends and events of its external environment.  According to Gomez (2006, p. 22), this information is very useful in helping the management to plan for the future course of action of the organization. This report seeks to carry out analysis of the critical aspects attributable to the National Australia Bank (NAB). The report considered NAB because of the nature of the business undertaken by the company. Bearing in mind that financial institution is highly prone to the economic changes, the report finds NAB a perfect example to be used in analyzing the company critical aspects.

Like any other financial institution, the National Australia Bank exist to make a profit. However, the company also offers not for profit products which help the company customers to grow their revenue.  This is achieved by proving financial advice to the community businesses.  NAB is the Australian largest bank serving more than ten million clients at more than eight hundred locations in Australia and New Zealand as well as other regions of the world. Besides, pursuing the goal of profit making the bank also engages in corporate social responsibility activities like funding the communities’ infrastructure such as roads, hospitals, and schools.  According to Grant (2010, p.18), the competitive organization should be guided by the mission which will ensure that the company operations are aligned to the target goals. Similarly, National Australia Bank daily financial and banking practices are guided by the values ingrained in the company’s mission statement.  The core value governing the bank in 2016 is that the business should be conducted with the observance of the ethics and professionalism to aid the organization to attain the highest standards of behavior.  The company's code of ethics helps in ensuring that the staff maintains the personal conduct at the individual level; conflict of interests are eliminated; financial advice to the clients is provided appropriately; fraud prevention and being honesty when dealing with the customers. The bank head office is located in Melbourne Australia with other branches New Zealand and then foreign branches.

External Environment of National Australia Bank

As discussed in the introduction part, an organization exist in the environment which is highly influenced by other factors. Apart from the internal environment which the company can control, there is an external environment which is beyond the control of the management. External environment can be categorized into classes that are, general and specific environment. The general environment comprises of nonspecific factors in the organization environment that might interfere with the organization activities and operations.  These factors include global dynamics, political-legal, sociocultural, technological and economic. On the other side, specific external factors are those components that affect the businesses which are in a particular industry. This means that the specific factor affects only those businesses which are undertaken almost the same or similar business activities. Like any other business, National Australia Bank has been a victim of both general and specific external factors in the year 2016. 

The present business environment is very critical in determining the business success or failure. If the environment is favorable, then there will be increased profit margins due to high consumption rates among the households. On the other side, during the economy crisis only a few and strong businesses will survive.  According to McWilliams & Siegel (2000, p. 605), the economy recession will force the businesses to operate at much-reduced margin level or break-even points. The businesses that cannot suit at the two areas and cannot afford to operate at a loss are left with no other option other to close down. Similarly, in the year of 2016, National Australia Bank has found itself entangled in the same dilemma. The stagnation in the economic growth has reduced the rate of investment in the country. This means that the bank has been faced with a few clients who can secure loans with the company.  

Alternatively, the small businesses which form a relatively fair percentage of the National Australia Bank customers has been experiencing the problem of cash flow. According to, Fimmano (2016) cash flow has continued to be one of the greatest challenges facing small businesses in 2016. This has made it difficult to meet their expenses as well pay the bank interests and the principal amount. Another, economic factor affecting NAB in 2016 is high debt owned both by the country and the individuals (Mckenna, 2016). This has greatly affected the Australian rating as well as weakened the country currency in comparison with other nations’ currency. Apart, of the high debt being a blow to the economy, it has also contributed to the reduced number of the individual seeking loans from the financial institutions. This is because both the government and the individuals are trying to lower the level of the debt to avoid liability costs. 

National Australia Bank General Environment-Economic

National Australia Bank can overcome these economic factors by temporarily laying off some of its employees during. Once the hard economic terms are over they should be recalled back. However, this is likely to raise a conflict with the country trade unions as well as court litigations due to a violation of the employment laws. Therefore, the most appropriate solution would be to encourage jib sharing among the company employees. On the other side, the company overcomes the problem of the cash flow among the small businesses by postponing the date’s loan payment dates and arranging for the renewal of the loans which have fallen due. Besides, the company can concentrate more on its international branches which will compensate for the loss made by the company in the home country. The increment of the operations by the subsidiaries can be implemented by designing new products at the subsidiary level.

Korhonen (2003, p. 27) noted that specific environment is the element of the organization environment that is impactful on the achievement of the organization objectives. These factors have a direct effect on the achievement of the company goals, and they include, pressure groups, suppliers, competitors and customers. Among the four components, competition is the critical aspect affecting the progression of the NAB. Despite National Australia Bank being the biggest Bank in Australia it faces stiff competition from other major banks such as Common Wealth Bank of Australia, Westpac and Australian and New Zealand Banking Group (ANZ) (Hoover Inc., 2016). These three banks have offered the company with a tough competition by poaching the company customers. NAB has retaliated by reducing its share value, minimizing the profit margins prospects and cutting the interests on loans to be advanced to customers.  According to Eyers & Yeates (2016) the company year, profits have not reached expectations, and the company shares have dropped rapidly. Eyers & Yeates attributes this phenomenon to the fierce competition from the company to business rivals.

The decline in the lending rates by the investors is one of the critical factors that have contributed to the fall of the company profit margins.  The company key competitors had started a serious company of acquiring the NAB customers by offering loans at discounts hence increasing their pool of customers at the expense of NAB. The problems still worsened forcing the company to offload one of its life insurance business. This was the act adopted by the management to prevent further fall in the company shares. From the above analysis, it is clear that NAB competition has been very a critical aspect to consider not only in 2016 but also the coming years. However, there are several approaches that the company can adopt to reduce the problem of competition.

Specific Environment-Competitors

Competitors are a crucial part of the business, and they cannot be ignored (Lepoutre & Heene, 2006, p. 258). They either help build or destroy the business depending on how the management can handle them. For NAB, the company can play the same game being portrayed by its competitors. Bearing in mind that the competitors have won the NAB customers through discounts when booking loans, NAB can perfect the same by giving a higher discount than the competitors. This will not only win the company's customers back but will also attract both the potential and active customers of other financial institutions. However, this might severely affect the company profits margins in the short run, but in the long run, the company will enjoy good returns. Alternatively, the company can use lucrative business of lending to the medium and small businesses. Even though this company crown jewel has been greatly affected by the actions of the competitors, the company can manage to maintain its customers by offering loans at reduced rates as well as additional financial advisory services.

Apart from the financial responsibility of maximizing wealth for the company shareholders, the company also has societal and ethical responsibilities that are confined in the organization corporate social responsibility (Freeman & Philips, 2002, p. 335). Corporate social responsibility requires that the company should extend responsibilities to meet the needs of the other stakeholders such as local communities, suppliers, customers, state governments, and employees in addition to the company shareholders. Apart from engaging in the corporate social responsibility, organizations also required to uphold to the suitable ethics. Jamali (2008, p. 214) defined ethics as the behavior and morals attributable to the organization staff. Ethics entails what is right versus what is wrong and what is good versus what is bad (Gan, 2006, p. 218). Organizations should adopt to the acceptable business ethics in the operational activities as well as when interacting with both the internal and external stakeholders.  

Corporate social responsibility is a crucial component of the organization management. It is an aspect that cannot be ignored or it will result in conflicts from the company stakeholders (Friedman, 2007, p. 33). As a result, managers are forced to come up with the several approaches on how to engage in corporate social responsibility activities. Some of the approaches that managers adopt in corporate social responsibility activities include the Golden Rule principle, whereby the management act in a manner that it expects other to act towards the company. Secondly, the utilitarian principle whereby an act is good if it results in benefiting the greatest number of the stakeholders. Third, egoism principle where the act is deemed good if it serves the interests of the company management.  

National Australia Bank has also found itself in this critical component of the corporate social responsibility. The company does not only focus on achieving higher profits without putting into consideration the needs of the other stakeholders. One, of the company core, approaches to corporate social responsibility is to provide sustainable and positive impacts on the lives of the key stakeholders such as communities, Australian people and customers (National Australia Bank Limited, 2016).  The company top management argues that for the company being socially responsible it will be viewed as the most respectable bank both in Australia and New Zealand. From this argument, the aspect of egoism principle sets in whereby the management seems to engage in SCR to gain credit once the company reputation is enhanced (Jamali & Mirshak, 2007, p. 245). On the other side, the company adopts the utilitarian concept whereby it is aiming at catering the needs of the broader community as well as customers and the people of Australia. By being socially responsible, National Australia Bank has been able to efficiently and effectively utilize resources; boost and protect the image of the company and reduce the risk of doing business.  

The company should not only be focused on engaging in massive corporate social responsibility activities but also to ensure that the activities are sustainable (Jenkins, 2005, p. 525). To perfect this, National Australia Bank has engaged in the social responsibilities that the company is good at. National Australia Bank has used over 35,000 employees to create positive societal change that will help the business realize its core value. This gives the notion of the golden rule principle whereby the company is trying to advance its CSR to the communities so that in return the company may benefit by progressing its core values (Joyner & Payne, 2004, p. 300). In the year of 2016, the company customers are major stakeholders that the company seems to pay a lot of attention. As illustrated by the National Australia Bank Limited (2016) National Australia Bank has kept the customers at center on everything the company does.  

Apart from meeting the needs of the company customers, the National Australia Bank is also helping other stakeholders in various areas. The company is in the fore front in ensuring social cohesion whereby the NAB works with partners to address the serious issues affecting the society.  For example, NAB is focused on building strong communities by ensuring affordable housing, the prosperity of the indigenous communities and addressing the issues of family violence.  The company participates in the environmental wellbeing. National Australia Bank has adopted the sustainable approach to managing the company business through Agribusiness Bank activities as well as investment in the renewable energy. Finally, the bank ensures that all the company customers can access affordable and fair financial services.  The company corporate social responsibility on customers is centered on ensuring that customers can be alleviated from financial shocks.  

Organizational culture involves the system of binding beliefs, values, and assumptions that govern the peoples' behavior within the organization (Awadh & Saad, 2013, p. 169). These organizational values have a strong impact on how employees perform their jobs, act, dress and talk while in the organization context (Brooks, 2006, p. 12). On a daily basis, organizations come up with the new organizational culture which helps in maintaining and guiding the behavioral boundaries among the members of the organization. The findings indicate that every organization has its distinct organizational culture that governs how the company undertakes its activities and operations (Cascio, 2006, p. 25). The company employees make judgment on the organization culture characteristics and amend their behavior to suit that of the organization (Chenhall, 2005, p. 36). Therefore, it is the organization culture that molds the behavior of the employees. However, the employees to adapt to the organizational culture, the company management should establish good policies that will help the organization members to adjust their behavior to match that of the company. This is because they are people who make up the organization culture but not the company (Awadh & Saad, 2013, p. 172). Otherwise, the company will be only the empty shell without people.

The National Australia Bank has recognized the importance of the organizational culture and thus it has developed the company culture which is focused on addressing the interests of the stakeholders. The company culture is confined into five values that include doing the right thing, respecting others, being bold, willingness to win and passion for customers. Upon looking at the company culture values is undisputable that the company is geared towards shaping its business as well as people every day. Through its values, the company works with the local communities in the efforts of improving the wellbeing of those who are around the company activities. Additionally, the company provides inclusion of the communities in the company activities and development opportunities.  

From the above scenario it clear that the National Australia Bank Limited organizational culture is emphasized on people. People who make up the large part of any company stakeholders are the most important surrounding environment. People actions are key determinants of the organization success or failure. To perfect this organizational culture value, National Australia Bank has always ensured that the company decisions are favorable to the people both inside and outside the organization. Therefore, the company emphasizes on treating all the people with respect and dignity. Besides, developing friendly decisions to govern the people, the company has also supplemented the emphasis on value by being innovative. The National Australia Bank has given innovation a priority. The innovative company employees have been very crucial in helping the company in its corporate responsibility activities. The company discourages the employees to do the same job the same way as they have been trained. Instead, the company urges the employees to look for the better ways on how they can improve their performance. Improved innovativeness by the company has been very crucial in helping the people both directly and indirectly associated with the company. 

Conclusion 

Organizations exist in environments that are full of dynamics. These environments comprise the critical aspects that can either hamper activities of the organization or boost its prosperity. What determines whether the organization is going to overcome the negative aspects depends on how the management is knowledgeable about the environment surrounding the organization. The success of the organization requires the management to stay abreast of the current changes in the business environment. An organization which has deep and comprehensive knowledgeable knowledge about its environment will be able to use is a strength to overcome the aspects that might threat to the success of the company.  National Australia Bank is surrounded by some critical aspects that are worth analyzing. Despite that the company core critical aspects seems to work for the benefit of the company some areas need to be addressed. The company is facing stiff competition from the other four major banks in Australia. This has not resulted to the dropping of the company profit margins but also interfering with the lucrative business which comprises both the medium and small businesses. To overcome this problem, the company should focus on reducing the prices of the products provided by the company fairly below that of the competitors. To compensate for the decline in profit the company should aim at maximizing returns on its foreign branches. 

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