Market Entry Opportunities for Commonwealth Bank in France, Korea and Brazil

This report highlights the market entry opportunities of the Commonwealth Bank in Australia. The new markets like France, Korea and Brazil and so on have been considered as the primary domains for the market expansion. The report includes PESTLE analysis of the three markets, analysis of the future developments of the three markets and recommendations. The subject is International Business and the course code is not mentioned. The college/university is not mentioned.

Running head: INTERNATIONAL BUSINESS
INTERNATIONAL BUSINESS
Student’s Name
University Name
Author’s Note

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Executive Summary
This report highlights the market entry opportunities of the Commonwealth Bank in Australia.
The new markets like France, Korea and Brazil and so on have been considered as the primary
domains for the market expansion. The bank have immense control over the Asian domain and
have more than 10% takes in two public banks of Indonesia. Under the recent presidential rule,
France have also evolved as a feasible market for the financial institutions as financial sector in
France have developed 150% in the last five financial years. This is why, the company can
highly consider the chances of entry in French market. Brazil have immense possibilities of
financial expansion. No potential private financial institutions hold large equity stakes in Brazil
that is why the company can consider funding the micro enterprises and start-ups who
manufactures various products of forest origin. After acquiring the Brazilian market, the
company can also consider expanding in to the Venezuelan and Chilean market also.

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Table of Contents
1. Introduction..................................................................................................................................3
1.1 Company Background............................................................................................................3
1.2 Current Business Scenario in the Australian market (here you will write why the company
is trying to expand to foreign markets)........................................................................................4
2. PESTLE analysis of the three markets........................................................................................5
2.1 France.....................................................................................................................................5
2.1.1 Political factors................................................................................................................5
2.1.2 Economical factors..........................................................................................................7
2.1.3 Social factors...................................................................................................................7
2.1.4 Technological factors......................................................................................................8
2.1.5 Legal factors....................................................................................................................8
2.1.6 Environmental factors.....................................................................................................9
2.2 Brazil......................................................................................................................................9
2.2.1 Political factors..............................................................................................................10
2.2.2 Economical factors........................................................................................................10
2.2.3 Social factors.................................................................................................................11
2.2.4 Technological factors....................................................................................................11
2.5.5 Legal factors..................................................................................................................12
2.2.6 Environmental factors...................................................................................................12

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2.3 Korea....................................................................................................................................12
2.3.1 Political factors..............................................................................................................12
2.3.2 Economical factors........................................................................................................13
2.3.3 Social factors.................................................................................................................13
2.3.4 Technological factors....................................................................................................13
2.3.5 Legal factors..................................................................................................................13
2.3.6 Environmental factors...................................................................................................14
3. Analysis of the future developments of the three markets........................................................14
4. Recommendations......................................................................................................................15
7. Conclusion.................................................................................................................................15
Reference List................................................................................................................................17

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1. Introduction
Australian Commonwealth Bank is one of the famous bank in the Oceania region with its
branches spread across different parts of the world, among them the notable are United States,
United Kingdom, China and so. The central bank stared by Labour Government in the year 1911
evolved as a public bank in the year 1996 and is now hoping to spread their hands in the
countries like Brazil, France and Korea after capturing a notable quantity of market in countries
like New Zealand, Papua New Guinea, China and so on with their digitalised modern banking
and competitive financial services. In this context, this report tends to make an analysis of the
major business prospects that the ACB would enter if they consider entering in to the
1.1 Company Background
The Australian Commonwealth Bank is one of the most renowned bank, having its roots
in the continent of Oceania, which comprises Australia and New Zealand. In spite of coming in
existence since 1911, the bank was declared as a public bank from the year 1991 and was listed
officially in the Stock Exchange of Australia. Since its establishment under the Labour
Government led by the Andrew Fisher, it was the only centralised bank in the continent of
Oceania. Later due to the improper management, the Bank Authority decided to hand over the
Papua New Guinea and Solomon Islands branches to the local governments respectively (Borne
et al. 2018). Again, Andreu, Claver and Quer (2017), informs that in the late 80s and early 90s,
the bank acquired majority of the New Zealand’s ASB Bank and the Victorian State Bank. In the
end of the 90s, the bank became the most valuable and trusted bank in the Australia and New
Zealand region with the help of its banking and financial services.

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1.2 Current Business Scenario in the Australian market (here you will write why the
company is trying to expand to foreign markets)
In the early 90s, the banking giant made itself free from the hands of the Australian
Government and emerged as a public bank, with the government holding some of its shares. As
per Chetty, Ojala and Leppäaho (2015), the bank made huge progression after being emerged as
the largest private bank in the year 1996 with the formation of its own board of directors with
government holding none of its shares. In the starting years of 21st century, the bank first saw
their scope to expand their business in the Asian region and with that objective, their first step
was, acquirement of the full ownership of PT International Bank of Indonesia and renamed the
acquired one as PT Commonwealth Bank. With the objective of further expansion, the bank went
into co-operational agreements with Chinese banks like the Jinan Commercial City Bank and the
Hangzhou Commercial City Bank resulting in their shareholding of 11% and 19.9% in the
respective banks (Pellegrino, Lanzini and Leone 2015). Among their local expansion, they
acquired 50% share in the National Colonial Bank of Fiji. In recent time, the bank is seeing its
hope of expansion in the European and American regions.

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Figure 1: Strategic advancements of Commonwealth Bank in favour of International
Expansion
(Source: Gennaioli, Martin and Rossi 2014)
2. PESTLE analysis of the three markets
2.1 France
2.1.1 Political factors
The political factors for the improvement of the banking sectors in the France looks
promising because of the coming of President Emmanuel Macron, who supports the
development of business in the country, under his president-ship, the country showed around
150% improvement in the Technology and financial firms and is regarded as a business-friendly
president by the other members of his party (Babb and Kentikelenis 2017). France showed a
huge improvement in the after months of the Financial Crisis in every part of Europe. France
1.
The bank made huge progression after being emerged as the largest
private bank in the year 1996 with the formation of its own board of
directors with government holding none of its shares
2.
The bank first saw their scope to expand their business in the Asian
region and with that objective, their first step was, acquirement of the
full ownership of PT International Bank of Indonesia and renamed the
acquired one as PT Commonwealth Bank.
3.
the bank went into co-operational agreements with Chinese banks like
the Jinan Commercial City Bank and the Hangzhou Commercial City Bank
resulting in their shareholding of 11% and 19.9% in the respective banks

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showed 1.9% development in GDP which is much higher than 1.6% expected by the IMF
(Čipčić and Pavić 2016). But there is also risk factor as the public debt in the banking sector
seems to be increasing and resulted in 98.1% GDP in the third trimester of the year 2017. Overall
the political factors are very much favourable for a banking firm to expand in this country as it is
the seventh largest economic power followed by United Kingdom and India and is growing by a
high margin every year. Another promising factor which opens the way for the financial firms in
the country is the implementation of Euro as the only currency to be used in every part of Europe
by European Union through the BREXIT, which will help the financial firms to deal in only one
currency in any part of the country.
Figure 2: The Chief Political Factors
President Emmanuel Macron,
supports the development of
business in the country under
his president-ship, the country
showed around 150%
improvement in the Technology
and financial firms
Under his president-
ship, the country
showed around 150%
improvement in the
Technology and
financial firms
France showed 1.9%
development in GDP
which is much higher
than 1.6% expected by
the IMF.

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(Source: Developed by the researcher)
2.1.2 Economical factors
The economy of France is favourable for the expansion of any financial service because
the country has just revived from the hands of economic crisis and due to large increment in the
employment of the skilled workers. As opined by Charpentier (2018), the fresh and new tax-cut
offs by the government will also help the inhabitants to spend more on their household items as
well as in luxury items. As the country is one of the preferred place for tourists to visit, the
international monetary transaction rates of the financial firms are increasing, indicating towards a
promising increment in the transactions. As per Bongini, Nieri and Pelagatti (2015), another
main thing which is increasing is the Foreign Direct Investment because of being a global leader
of automobile and aerospace, by the countries like United States of America, Germany, Italy, and
United Kingdom and so on. The most important thing is that the price of the Euro is increasing
day by day compared to the dollars, used as currency by Americans and is the second preferred
currency after USD (Yilmaz 2017). As explained earlier, the GDP growth is higher than
expected by the IMF, so no problems regarding the GDP should come as headache to the
financial firms.
2.1.3 Social factors
France is among those nations, which was struck by the economic crisis in the end, so the
economy is still stable. After being healed from the economic crisis, the French government are
hiring new skilled people for their various works and due to this, the spending capacity of the
people are also increasing compared to the latter half of the 2017, which saw the most
declination in the business and financial services (Center 2018). Most of the people in the France

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are ready to step towards a digitalised banking system and this will help the Commonwealth
Bank of Australia to expand their business in the France because from 2000s, they changed their
mode of transaction and made it digital in their root country, Australia and now in Oceanian
region, their 80% of transaction is done by online mode by the customers themselves and the
bank made the digital transaction, backbone of their financial services (Janda and Kravtsov
2018). The bank will be accepted by the people in France if they offer online payment solutions
along with cashless transaction along with attractive rate of interests.
2.1.4 Technological factors
France being a developed country and one of the global leaders of the automobile and
tourism industry, faced many problems in the start of the Twenty first century as there was many
technological advancements. The main factors that affected banks is the digitalisation of the
banking and digital payment. New financial companies sprang up who only concentrated on
digital payments and digital ways to manage and transfer the currency, which affected the banks
who followed the traditional way of banking. However, the Australian Commonwealth Bank will
not face any problems if they follow the method of online banking as followed by them in
Australia and being one of the first banks to use the Contactless Cards by the Visa, their future is
looking much more promising than the established banks in France, if they wish to expand there
(Gennaioli, Martin and Rossi 2014). Another thing favourable for the expansion of the digital
financial services is the availability of the skilled programmers and code writers in the country
itself, to analyse and handle the digital banking needs of the customers.
2.1.5 Legal factors

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It is the only factor, which will affect the new financial firms with the wish of expanding
their business in the France because the land laws are not efficient, and the property loans are not
performing well as the builders are least interested in making new buildings are the people are
also not interested in purchasing new ones. However, Zhao (2018), opines that the new French
Bill presented on September 2017 and already came to existence from January 2018 is showing
its effect with new policies to the inhabitants of the country. According to the bill, from now
people can pay tax only if they earn and reduction in the corporate income tax from previous
33.33% to newly made 28%, which helped many financial firms to offer business loans to the
new firms which are springing up in the country (Flannery 2016). Another law which also helped
in development of the small business firms and this is the Macron Law. According to the Macron
Law, large business firms are prohibited to make themselves open on Sundays and made way for
the retail stores to make themselves open in the Sundays and evenings every day and thereby
resulting in huge amount of cash and digitalised transactions through these retail stores.
2.1.6 Environmental factors
The environmental conditions are ideal for any financial firms to set up their business in
the France. France is covered by water on three sides and land on one, resulting the country to
become one of the top exporting economy in the world. France being the hub of Aerospace,
automobiles and natural gas production exports these countries like Germany, United States,
United Kingdom, and Italy and so on resulting in the Foreign Direct Investment of these
countries in France thereby making an opportunity to the financial firms to deal in the foreign
investments of these firms (Wang et al. 2017). Thus, a well renowned bank like the
Commonwealth bank will get the opportunity and will also be preferred because of its years of
experience in Asia and Oceania region.

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2.2 Brazil
2.2.1 Political factors
There are no political problems in the country and the company began to grow its trade
holding the hands of President Michel Temer, who came to responsibility on 31st August of the
year 2013. He changed many things among which the one is the bilateral trade between Brazil
and Australia and he instead visited China with the hope to increase foreign investment in the
country and it was due to his credit that the country achieved foreign investment of USD $66
billon, reported at the end of 2015 (de la Torre, Gozzi and Schmukler 2017). As a responsible
President, he proposed new reforms on tax and pension for the inhabitants. But the risk factor is
that in the congress, many of people are jealous of his achievements and wants to bring him
down and the next voting is due on October 2018 (Gennaioli, Martin and Rossi 2014). But due to
his improvements in the foreign policies, other countries are also investing in Brazil and this
opens opportunity for well-known banks like the Australian Commonwealth Bank to get into the
financial services of the country.
2.2.2 Economical factors
Economically Brazil is incomparable to the wealthy countries of Europe and America and
is still trying to recover from the economic downfall of around 3.8% and 3.3% in 2015 and 2016
respectively. All credit goes to the current president because due to his hard work, the economy
is expected to grow by 1.5% according to the International Monetary Fund and is hoping to see
many foreign direct investments due to decrease in Corporate taxes (Calomiris and Haber 2014).
Brazil is the chief producer of coffee and different diverse seeds and exports many things like
ores, seeds, sugar, iron, steel and so on to countries like China, U.S.A, Argentina and so on,

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which amounted to USD $186 billion in the end of 2017. According to Puffer, McCarthy and
Jaeger (2016), Brazil is ranked 123rd in World Bank’s Business doing ease index and 81rd in
World Economic Forum and these figures are likely to decrease, opening way for the foreign
financial service providers like Australian Commonwealth Bank to get an entry.
2.2.3 Social factors
Brazilian society is not very well developed with social inequalities and the people are
not very much educated. Although the Human Rights are preserved but there are many places
where the rights are not preserved, and slavery prevails there to some extent. Moreover, the
society is underdeveloped. As informed by Bruhn et al. (2016), government is taking strict
actions to punish the people who is supporting bribery and slavery and is trying to distribute
education among the people living there. Some private firms also take responsibilities to
distribute social awareness among the inhabitants but that is not enough. Brazil ranked
51stcountry in the Global Slavery Index and 49th country in the Heath Index (Zhang et al. 2015).
In these conditions, any financial firm could enter into the market and will get Government’s full
support to spread their business through the people by making them aware of the basic rights
they deserve and some basic concepts of finance and banking.
2.2.4 Technological factors
As the society is not very much developed and the most modern and developed
connectivity doesn’t prevail there, any financial firm entering into the market will have to follow
the traditional banking which prevailed through ages in the different parts of the world. The bank
will not have to invest much to enter into the market with the idea of placing branches in the
different parts of the country and following the offline mode of transaction with customers

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presenting themselves for any of the banking needs. The bank can also make progression if they
can slowly make people aware about the ease of digital banking.
2.5.5 Legal factors
The country’s laws are governed by federal legislation and government has few of the
rights to change in the laws if there come any problems in environmental, tax and other issues.
The government of Brazil is likely to establish Free Trade Association (FTA) like the European
Free Trade Association and is in talks with the European Union to sign new trade agreements
which will favour the expansion of financial firms like Australian Commonwealth Bank in the
country.
2.2.6 Environmental factors
The geographical location of Brazil is very much favourable as it falls under the tropical
climatic region and has only two weather conditions, one is rainy which the summer season is,
and another is dry which the cold season is. As most of the part of the country is covered by
amazon rainforests, many diverse seeds, plants and wood is found and is exported to many
different countries resulting in the investment of these countries in Brazil, thereby making an
opportunity for the financial firms to expand their business in Brazil (Janda and Kravtsov 2018).
Local Business entrepreneurs who engages in business that involves utilisation of the local
natural resources need business loans and organisations like the Commonwealth Bank amply
prefer these entrepreneurship.
2.3 Korea
2.3.1 Political factors

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The South Korean Government is very much supportive to the companies which are
willing to set up their business in their country. As a part of improvement in the development in
the country, the government introduced “Free Economic Act Zones” which helped many
companies as well as the nation to perform like advanced nations (Yilmaz 2017). Under this act,
government offers break from taxes and financial support to local as well as foreign firms willing
to expand there.
2.3.2 Economical factors
The country has grown very much because of the government and the economic
condition is developing day by day. As informed by Wang et al. (2017), the government took
strong economic reform for the economic development. But the stringent import rules affects
import and foreign direct investment. But the government is taking measures to change the rules.
2.3.3 Social factors
It is one of the south Asian country which has the higher wage, compared to the other
neighbouring countries. This is one the countries having high literacy rate as a result, skilled
work force is found, and they spend lot of money in their local markets due to high wage and any
foreign bank can take its advantage to establish themselves.
2.3.4 Technological factors
South Korea is a hub of technology from the start of 21st century with many global and
local companies being on top of the technological sphere (Bruhn et al. 2016). This is the first
country to introduce Wireless Broadband and Satellite media and the telecommunication
connectivity is best among the other Asian countries. This will help the Australian

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Commonwealth Bank to perform a fully digitalised banking solution in the country and will also
favour its growth in Korea.
2.3.5 Legal factors
The South Korean government follow judiciary system which is followed in United
States and Germany and in this system, there is no jury and a constitutional panel keeps a watch
on government policies and reforms and this is favourable for financial firms to independently
spread their business with Government support in this country as the government provides
incentives which are regarded as best among all the south Asian countries.
2.3.6 Environmental factors
South Korea has very few or little natural resources and is covered with 29% forest and
mountain area. Korea’s 6.6% is covered with national parks and government is taking incentives
to conserve the parks (Sanfelici and Halbert 2016). Government is spending lot of money to
maintain these national parks thereby attracting tourists from different countries and this makes
an opportunity for financial firms to get into market and expand through tourism income.
3. Analysis of the future developments of the three markets
These markets will advance day by day because, many investors have kept a watch on
the markets of Brazil, Korea and France. In Brazil, Gallagher (2015), opines that the investors
are eager to invest in the medical fields because of the Amazon rainforests being the home to
new and diverse species of plants and trees. Unlike Brazil, investors are eager to invest in the
automobile manufacturing and the aerospace engineering which is advancing day by day and
Korea being the hub of technology and digital advancements, investors are also interested in it.

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All these results in the increment of the foreign direct investment, thereby opening an
opportunity to the financial firms which are having the wish of their expansion in these countries.
The foreign markets of Brazil, France and Korea are growing day by day in the financial
sphere and attracts many foreign investors and the rate is increasing year by year at an average
growth rate of 12.9% and is expected to grow by 17% according to International Monetary Fund
(Sanfelici and Halbert 2016). By expanding in these markets, the Australian Commonwealth
Bank will advance in the direction of establishing itself as a Global leader in the financial sphere.
4. Recommendations
The financial firms which are newly expanding to the country should keep a watch on
their market rivalry and the demand of the customers. Their sole objective should be that how
they can cope up the new market advancements and if possible, they should introduce new ways
to attract new customers, thereby increasing number of customers and number of transactions.
On the starting years, the bank should only concentrate on improving the customer’s base and the
service quality. The Australian Commonwealth Bank has been able to gain the allowance of the
Prudential Regulatory authority to implement its remedial plan of expansion in the new countries
as proposed. As such, they would be able to enjoy the financial back up from the IMF and the
local Free Trade area. The applicable Repo and Rev. Repo would remain flexible for the
organisation in case if they follow the Prudential Regulations.
7. Conclusion
Analysing the market conditions of the proposed business markets, it can be concluded
that the amount of government favour that ACB would get in Korea is the most. Moreover, there
are ample prospects of micro financial investments in business loan and insurance sector in

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Brazil. The stock capital level being low, the company might face issues with retrieval of loans
and other mutual fund capital from the market. The monetary centralisation is best suited in
France and other European markets owing to the EU regulations. The Prudential authorities also
provide the best opportunities for expansion in UK and preferably in France. The economic
stability in the country is better than Australia.

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