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Overview of the Commonwealth Bank of Australia

Discuss about the Strategy formulation for international expansion.

The Commonwealth Bank of Australia is a multinational Australian bank having its headquarters in Sydney. Its business is spread over a wide range of markets across the world. These include New Zealand, Fiji and some other selected Asian markets, the United States and United Kingdom ( The bank was established in the year 1911 and was turned into a public company in the year 1991. The bank provides a number of different services that includes financial services, retail business, fund management, institutional banking activities, insurance services and many more as such. It is the largest company listed in the Australian Securities Exchange and has a wide range of banking products under its belt. The mentioned Australian bank has been gradually increasing its presence outside the shores of Australia and is pursuing fresh opportunities in distant lands. The management of the bank has plans to enter new markets in Asia and other markets of different continents to explore new opportunities. The international expansion of the business will make it one of the top ranked banks in the globe and increase its profit margin ( While resources and capabilities are certainly important, recent work on the following have implied that the strategies are modified according to the characteristics of the particular context in which the organization operate. The host country where the business decides to make an entry and the native institutions of that particular country plays an important role in the formulation of the key strategies to be successful in the long run.

A proper analysis of the theory developed specifically out of the changes to global markets has shown very little development of the standard theories of market segmentation, proper pricing and appropriate pricing methods and distribution channels which was the main theme of the local marketing theory (Ferreira et al. 2014). The markets nowadays are well assessed before a firm actually starts operating.  Because of the scientific and well calculated assessment made by the organization, the company will not face any major difficulty after they enter into the market.

Structural Difference of the Different Markets

The main aims of the Commonwealth bank of Australia are to establish its influence in the different strategic locations of the World. This includes the Asian market and some selected markets of Europe and South America. Apart from targeting the developed economies of France and South Korea, it has plans to establish operations in the developing economy of Brazil.  The plan of the organization is to develop some specific and well designed financial plans according to the demands of the market (Geringer et al. 2016). The organization has to make sure that they have the adequate strategies in place for each of the selected countries namely France in Europe, South Korea in Asia and Brazil in South America.

Commonwealth Bank of Australia's Expansion Strategy

Starting with the cultural capital of Europe, France is one of the largest and most powerful economies of the modern world. It occupies the 8th position in terms of economic prowess of the globe. It also attains its position because of its position within the European Union strong economic zone. In general the commercial environment of the mentioned country is favorable for the companies that have plans to establish their business in the country. Though there are some striking cultural and social differences which will create some issues for the management of the Commonwealth bank, it will not pose a serious problem in the development of the organization in the market (Papadopoulos and Heslop 2014). The people in France have the interest to try out new products and explore other opportunities that come their way. However the presence of a strong national feeling makes them more inclined towards the local companies. According to, Geringer et al. (2016) the competition in the banking sector can be fierce because of the presence of a large number of developed and proven banks in the markets. Like the other European countries the traditional distribution channels are being dominated gradually by digital and sharing economy. This makes competition even fierce for the organization. The management of the bank must make sure that they introduce the business in France which will provide all digital solutions to the consumers of the bank (Peteraf Gamble and Thompson  2014).  Just because of the digitalization of the modern French banking system, the non-financial agents are regularly being offered incentives to function more transparently and efficiently to help the bank to provide the services to the consumers.

Unlike to the developed market of France the Brazilian market is yet to reach its maturity. The Brazilian market is believed to be having a bright future and thus there has been a recent spurt of the industries as well as the financial companies to open their establishments in the country. The hosting of two of the World’s biggest sporting events namely the Fifa World Cup 2014 and the Summer Olympics of 2016 has pushed for a major economic boost for the South American Country. The initial figures stood at a staggering $24.5 million increase in the economy by the year 2025. The management of the Commonwealth Bank has decided Brazilian market more because of the estimated annual visitors visiting the country. The mentioned South American Market follows the structure of a free economy which helps the business to perform in a open manner (Gonzalez Dabic and Kiessling 2015). The market economy and the economical out base of the country is mostly dependent on the modern forms of technology. Commonwealth Bank thus has to apply similar technologies to immediately capture the market.

Market Analysis of Target Countries (France, South Korea, and Brazil)

The $ 1.8 trillion GDP of South Korea makes the country the 11th largest economy of the World.  Korea’s main strength lays in different areas of technological and engineering expertise namely Shipbuilding industry, steel, petrochemical, electronics and many more as such. The Unique industry standards, transparent set of guidelines to be adapted by the companies to do business in the Korean mainland, competitive domestic market and the presence of latest innovative technologies have made Korea one of the favorable countries for financial investment (Gonzalez Dabic and Kiessling 2015). The presence of large scale industries has been one of the main reasons for the proposal for the establishment of the mentioned Australian bank in Korea. However in the recent times the Korean market is experiencing a downturn financially which has taken a serious toll on the banks present in the Asian country. Though there have been constant efforts of the Government of the country to stabilize the system some major issues have led to the continuation of the gloomy phase. However Commonwealth bank being one of the topmost banks can implement adequate strategies to ensure the success of the business in the following market (Piekkari Welch and Welch 2014).

International expansion of the banks thus can involve a lot of different activities and modes. This can involve acquisitions, joint ventures, trade agreements, start-up’s and many more such related procedures. The banks thus choose different options while they decide to enter into new markets. The marketing research that will be carried out by the organization will thus find out that unlike the markets of Korea The market of Brazil and France are quite well developed and organized in nature.

The Commonwealth Bank of Australia has plans to expand its business to new markets including that of Brazil, France and South Korea (Xie Batra and Peng 2015). Some of the main banking products and services will include, loans, savings account, current deposits, hedging solutions, share market transactions, mobile banking services and many more as such.

Some of the main factors that will help to estimate the size and profitability of France are;

  1. Presence of the country in the strongest economic zone of EU
  2. Third largest economy of Europe and 8th largest of the world
  3. Future market growth as a result of BREXIT
  4. Moderate but effective GDP growth

       Some of the main factors that will help to estimate the size and profitability of South Korea are;

  1. One of the potential economic super power in future
  2. Presence of the Mixed economic system is a large advantage
  3. Liberal Market

       Some of the main factors that will help to estimate the size and profitability of Brazil are;

  1. Latest policies have brought reform in the financial system of the country
  2. Presence of large scale industries will help to increase the financial business of the bank

Commonwealth Bank of Australia is similar to all the other banks of the world in facing crisis situations while establishing their operations in new places around the globe. Some of the common problems are;

  1. The local success strategy of the bank may not be successful in international markets and thus they have to formulate a totally new strategy for expanding
  2. Serious legal and regulatory issues can deem the possibilities of the banks to earn profits
  3. It is not possible to meet the demand of the international customers every single time


The financial market of Brazil is already well developed and apart from such a development the market offers more development in the future. The mentioned South American country is one of the few in the list of countries that still faces the effects of the recession and has been struggling to meet the demands of the modern market. The IMF (International Monitory Fund) has provided an estimate that the country will finish last  in the list of the most slow among all the developing countries in the coming few years. The inflation rate of the mentioned South American Country has been on a stagnant rate for quite a while now and the government along with the Reserve bank of the country has been unable to deliver exact solutions to remove the current mess (Xie Batra and Peng 2015). But according to different experts there had been such cases earlier where the country has gone through similar situations and recovered quite fast. Such a special ability has eased the pressure out of the investors and new business bodies and are thus targeting the country for establishing their business. The management of Commonwealth Bank of Australia have decided to embark upon their business journey in the country by implementing some special banking practices. These are as follows;

  1. Presence of the bank in the social media of the country and connecting with the new generation
  2. Introduction of mobile and internet banking facilities
  3. Customization of currencies
  4. Entering into agreements for acquiring small business ventures like financial firms or mortgage firms


The economic growth of the mentioned European country will see a robust growth of 1% in the financial year 2018-19. This will happen just because of the stronger external demand, growth in other activities li8ke tourism business opportunities, low rate of tax and job creation. Despite the reduction in the business and the capital income taxes, a stronger deficit growth should be helpful to bring down the budget deficit to just 3%.  The presence of the country within the strongest economic zone of the world helps the country to be the best market for foreign investment (Zheng 2017). The competitive nature of the market has been another plus point for the country to be successful in attracting financial and other forms of industrial organization in the market. The presence of a large number of financial sectors, research and development centers, consumers and start up initiatives helps and will also help the country to be an ideal centre for foreign direct investment.

The marketing team of the company has started a detailed market research in France and they hope to start their operations in the market as soon as possible. However the management has to make sure that they keep themselves updated with the latest technologies of the market and also the different new inclusions within the market. Commonwealth Bank of Australia seeks to establish a longstanding understanding and trust with the new customers and ensure their sustainability in the market.

South Korea

Among the implementation of the new financial policies by the government of South Korea in the year 2005 two of the policy measures deserve special attention because of their large scale impact on the domestic market of the country (Zheng 2017). The first one being the overseas investment promotional plan whereas the second one involves the imposition of certain clauses on limits to financial account transactions. The following were considered to two of the boldest steps that have led the country’s economy to the position in which it stands on the present day. The Korean government after formulating such policies has implemented other such policies that have equally contributed to the success of the country. In South Korea Banking is slowly being converted to the way the banks wants them to be. The marketing research conducted by the research team of the Commonwealth Bank has reported that the concept of bank branches are slowly being replaced by the new age banking services like Mobile banking, Application based banking, e-statements, internet banking and many more such digital technologies (Winata Mia and Langmann 2016). The highest amount of internet exposure to the citizens of the country amongst Asia will certainly pave the way for a totally new age financial structure. The mentioned Australian giants must set out its business according to the demands of the modern customers and set a step ahead for total digitalization.

Consideration of Foreign Exchange and Trade Implication

The foreign exchange considerations are one of the key to the success of a bank in the international markets. It involves the process by which foreign currency like dollars or pounds are converted according to the exact value of the local currency. The rates have a direct effect on the international trade, political issues, cash flows and the profit of the banks in the international markets (Suzuki and Okamuro 2016). In the particular case the Commonwealth bank of Australia has to convert their investments in Australian dollars to other international currencies. The bank usually sets exchange rates for a future date and the investors to hedge the flow of the foreign currency in the local market.

Cultural Aspects Impacting Entry

The entry of a business in a new market is not easy at all as because there are a large number of different barriers faced by the organization before starting their actual operations. The globalization of the world has increased the scope and chance for the foreign business firms to effectively expand their market and explore new horizons. The high competition in the foreign markets is making life tough for the organizations to stay stable and earn profits from these markets. But the new generation management of the companies is taking up the advanced challenge and is involved in rat race amongst each other to prove each other’s supremacy. The tactical and strategic battle in the market helps to deliver the best goods and services for the customers. The management of Commonwealth Bank has decided to expand their operations globally after making a huge impact in Australia, New Zealand and some selected Asian countries. They have taken up the challenge to establish themselves in some other countries of Asia and also expand in the less ventured Brazil and in France. The following can be attributed to the establishment of the 34th international branch of its rival ANZ bank in France a few days back. The management of the company has to overcome a number of different challenges like the socio, cultural, environmental and legal factors of each of the countries to get the taste of success (Strizhakova and Coulter 2015). However the most important obstacle to the new venture can be the lack of cultural knowhow which cannot be overcome easily. Language problems, reading the minds of the customers, way of influencing the customers, local traditions and other cultural factors can seriously act as a great hindrance to the establishment of the bank in the markets. The Management of the mentioned bank has thus formulated a local management team in each of the countries to make sure that the decisions can be taken easily and comfortably without always consulting the central management. The local team will consist of local people who are quite comfortable with the country and are better prepared for any drastic local needs.

Each of the countries has their own set of cultural identities and thus the need for different cultural strategies by the bank (Stahl and Tung 2015). The people of the countries must be provided adequate time to get accustomed to the foreign cultures of the bank and their way of providing services. For example the bank has to provide instant and updated service to the French and Korean consumers as they are quite accustomed to such services whereas on the other hand the organization must be careful while providing services in Brazil as the country is not accustomed to the latest forms of banking.

The main cultural aspect that needs to be maintained by the Commonwealth Bank includes;

  1. Language- Language acts as one of the main cultural barriers to the proper operations of the business. The consumers are more comfortable if the bank interacts with them in their mother tongue. This helps the organization to come closer to the people and make them easily understand the products and services. The management of Commonwealth Bank must employ local talents in the bank to get rid of the language related problem.
  2. Surnames- The use of surnames is preferable in some of the countries whereas in other countries surnames are used next to the first names of the people. This difference must be keenly noted by the management of the Commonwealth Bank and they must operate their business accordingly.
  3. Greeting techniques- Greeting techniques is another key cultural concept that the bank must know to make sure that they can satisfy the consumers and the local staffs of the employees. Formal techniques include shaking hands which may or may not be accepted otherwise in some country. The Commonwealth Bank of Australia have to expand their business after having a transparent idea of such different techniques.


The following project has been successful in conveying the readers the different aspects that leads to the entry of a business in an international market. The investigator has provided transparent and specific details like the problems, the market condition and the future implications of the business. These elements act as a proper recommendation for the management of the Commonwealth Bank of Australia. A thorough analysis of the project can deliver some clear outcomes namely;

  1. Mode of market Entry
  2. The products and services that are to be launched in the new market
  3. A thorough idea about the competitors in the market
  4. The proper time to enter the market


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Geringer, M., Ball, D.A., Minor, M.S. and McNett, J.M., 2016. International business. McGraw-Hill Education.

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Hill, C., Hult, T., Wickramasekera, R., Liesch, P. and MacKenzie, K., 2017. Global Business Today Asia-Pacific Perspective. McGraw-Hill Education.

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Lynch, R. and Jin, Z., 2016. Exploring the institutional perspective on international business expansion: Towards a more detailed conceptual framework. Journal of Innovation & Knowledge, 1(2), pp.117-124.

McFarlin, D. and Sweeney, P.D., 2014. International management: strategic opportunities & cultural challenges. Routledge.

Papadopoulos, N. and Heslop, L.A., 2014. Product-country images: Impact and role in international marketing. Routledge.

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Piekkari, R., Welch, D. and Welch, L.S., 2014. Language in international business: The multilingual reality of global business expansion. Edward Elgar Publishing.

Stahl, G.K. and Tung, R.L., 2015. Towards a more balanced treatment of culture in international business studies: The need for positive cross-cultural scholarship. Journal of International Business Studies, 46(4), pp.391-414.

Strizhakova, Y. and Coulter, R.A., 2015. Drivers of local relative to global brand purchases: A contingency approach. Journal of International Marketing, 23(1), pp.1-22.

Suzuki, S. and Okamuro, H., 2016. Determinants of Academic Startups’ Orientation toward International Business Expansion. Administrative Sciences, 7(1), p.1.

Winata, L., Mia, L. and Langmann, C., 2016. Strategic Alliance, Information and Communication Technology, and Customer-Related Performance: The Role of Industry Characteristics. Contemporary Management Research, 12(3), p.337.

Xie, Y., Batra, R. and Peng, S., 2015. An extended model of preference formation between global and local brands: The roles of identity expressiveness, trust, and affect. Journal of International Marketing, 23(1), pp.50-71.

Zheng, C., 2017. Globalization and international human resource management.

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