Management Theory and Practice: A Case Study of National Australia Bank

This case study analyzes the management theory and practice of National Australia Bank (NAB) through the lens of traditional and contemporary management theories. It also discusses NAB's mission, governance, strategic position, and organizational management function.

RUNNING HEAD: Management Theory and Practice 0
National Australia bank
Management Theory and Practice

Management Theory and Practice 1
Contents
Introduction...........................................................................................................................................2
Mission and Governance.......................................................................................................................2
Strategic position...................................................................................................................................3
Organisation management function.......................................................................................................6
Conclusion and Recommendations........................................................................................................8
References...........................................................................................................................................10

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Introduction
The management theory will look at the mission and offerings of National Australia Bank
(NAB) through the lens of management theory, models and principles. NAB is a leader in
providing banking services. The bank provides specialized services to agribusiness,
education, health, government and community banking. It is complemented by NAB group
business in New Zealand, UK, Asia and USA. The vision of NAB is to be the most respected
bank in Australia and New Zealand. The strategic position of the company will be discussed
in reference to the where the company stands within the market by identifying it’s mission,
strategies and Strength, Weakness, Opportunity Threats (SWOT) analysis. Further, the
management characteristics of NAB will be analyzed against traditional and contemporary
management theories. The theories specifically focus on the planning, leading, organizing
and controlling functions. These theories also involve culture, core values and ethical
decision making. Finally, the management characteristics of the organization are evaluated
against the strategic positioning within the operating environment.
Mission and Governance
NAB is one of the four largest financial institutions in Australia. It is the mission of NAB is
to provide core banking and financial services professionally, efficient and competitively in
order to achieve pre-eminent position in the markets. The operations of the company are
driven by the mission of company and values. The values cover aspects of banking and
financial service practices. The values reflect that business should be conducted ethically and
with professionalism to achieve the highest standards of behaviour (Bernstein & Jain, 2014).
The value is protected by the company’s internal code of conduct which requires observance
of strict ethical guidelines. The code of conduct includes:
 Personal conduct
 Honesty
 Relationship with customers
 Prevention of fraud
 Financial advice to customers
 Conflict of interest

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The board and management of NAB recognises it’s duties and obligations to represent
shareholders and serve the interests of the company by overseeing and evaluating strategies,
policies and performance of company. The board monitors the performance of company and
builds sustainable value for the shareholders (Omondiagbe, Towns, Wood & Bollard-Breen,
2017). They also review and monitor the values and risk culture of company. The board of
directors of the company comprises one chairman, one group executive officer and eight non-
executive directors. The board performs in a manner consistent with the stated purpose and
values of company. They are liable to perform in accordance with the duties and obligations
imposed by the constitution and laws of company. The board takes actions in a manner to
promote fair customer outcomes and financial market reliability.
The board observes the need for highest standards of corporate policies and business conduct
for the ethical decision making. The bank has adopted a formal code of conduct which is
required to be followed by all the managers and employees (Johnston, 2016). The bank
focuses to act with morality, integrity and fairness. The members should make efforts in the
interest of the bank and should accomplish expectations of the shareholders. The code of
conduct concentrates to act in accordance with all the applicable laws, rules, regulations and
procedures. The members should have responsibility and accountability to report and
investigate reports of unethical practices. The employees are instructed to use bank’s
resources and property by taking all the measures (Daly & Gebremedhin, 2015). The
management of bank includes functions such as planning, organizing, leading and
controlling. Planning involves setting objectives and determining the course of action to
achieve these objectives. It involves analyzing opportunities, threats as well as strengths and
weaknesses. The organizing is the process of developing organizational structure of company
(Huarng & Ribeiro-Soriano, 2014). This process allocates human resources to ensure
objectives are accomplished. Leading includes social and informal sources of influence that
are used by the bank to inspire action taken by others. Controlling at NAB ensures that
performance does not differ from standards.
Strategic position
The strategic position of NAB can be analyzed with the help of SWOT analysis. It enables
managers to do a situational analysis of the firm. It is an important technique to understand
strength, opportunities, weakness and threats faced by the bank in it’s current business
environment. NAB is one of the leading banks in Australia. It has been ranked as the 22nd

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safest bank in the world. The bank maintains it’s prominent position by carefully undertaking
SWOT analysis (Setyaningsih & Rahmad, 2015). It is a co-operative process which requires
effective interaction coordination among various departments of the organization such as
operations, finance, marketing, management information systems (MIS) and strategic
planning (O'Neill, Beauvais & Scholl, 2016). The SWOT analysis facilitates the company to
identify internal strategic factors like strengths and weaknesses and external strategic factors
like opportunities and threats. The SWOT matrix is also known as 2X2 matrix.
Strength
NAB has a number of strengths which drives the organization in the marketplace. The
strengths not only helpful in protecting market share in existing markets but also helps in
penetrating new markets.
 Successful record: NAB has a successful track record of incorporating complementary
firms through mergers and acquisitions. The bank has successfully included a number
of technology companies the last few years to streamline it’s operations and to build a
consistent supply chain.
 Strong brand portfolio: NAB has invested in building a strong brand portfolio in the
past years. The brand portfolio is helpful in expanding new product categories. The
company is already successful at going to market strategies for it’s products (Kaiser,
El Arbi, & Ahlemann, 2015).
 High level of customer satisfaction: The company is able to achieve a higher level of
customer satisfaction among present customers due to it’s dedicated customer
relationship management department. It has attained good brand equity among the
potential customers.
 Performance in new markets: NAB has attained expertise at entering new markets and
making a success out of them. The expansion has helped the organization to form new
revenue stream and diversify the economic cycle risk in the markets (Geddes,
Schmidt & Steffen, 2018).
Weakness
Weakness is the areas where the bank can improve upon.

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 Inefficient financial planning: The financial planning is not done properly by NAB.
As per the evaluation of current asset and liquid asset ratios, the bank can use cash
more efficiently than it is doing at present (Khorasani & Almasifard, 2017).
 High day inventory: The days inventory of NAB is high compared to others which
makes the company raise more capital to invest in the channel. It can affect the long-
term growth of the bank.
 Challenges by new entrants: The bank has not been able to tackle the challenges
caused by the new entrants in the segment. It has lost a small market share in the
niche categories. The bank needs to build internal feedback mechanism directly from
the sales team to tackle these challenges.
Opportunities
NAB focuses on increasing business, trade and foreign direct investments.
 New trends: the new trends in consumer behavior can create a new market for NAB.
It provides a great opportunity to the bank to create new revenue streams and
diversifying into new product categories.
 New customers from the online channel: NAB has invested a large sum of money into
the online platform. This investment has generated new sales channel for the bank. In
the upcoming years, the bank can leverage this opportunity by identifying the need of
customers better and serving them in a better way (Sweeney, Grant & Mangan, 2015).
 Lower inflation rate: The lower inflation rate can create more stability in the market
and can enable credit at the lower rate of interest to customers of NAB.
 Environmental policies: The new opportunities can create a level for all the players in
the industry. It signifies a great opportunity for NAB to drive it’s advantage in new
technology and gain market share by investing in the new market category.
Threats
 New technologies: The new technologies developed by the competitors can cause a
serious threat to the company in the long term. It also causes the bank to increase it’s
competitiveness.

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 Isolationism: The increased trend towards isolationism in the economy can lead to the
same reaction from other governments thus international sales can be negatively
impacted.
 Environmental policies: The new environmental policies and regulations under Paris
agreement could be a threat to the product categories.
Organisation management function
Planning, leading, organizing and controlling
It would be anticipated that a range of planning techniques are used at NAB. The financial
forecasting in annual reports reflects a form of planning which makes company set targets for
it’s investment and expenditure. NAB adopts active operations management to transform
customer service performance. It enabled the bank to achieve excellence in operations
management through practices, simulation-based training programmes and web-based
workware software application. An explosion in the Australian economy and low-interest
rates resulted in 20% growth in the demand of home loans. Along with the market expansion
NAB experienced unprecedented backlogs and resulted in the loss of business and
dissatisfying customers (Kirillov, Tanatova, Vinichenko & Makushkin, 2015). It was
expected that some planning will take place in the scenario. The scenario planning would
enable an opportunity for managers and employees in the company to think beyond the
traditional challenges in the development of banking sector (Bowen, 2016). It could also
provide other possibilities which could threaten the stability of operating model, profit
streams and growth markets. The on-going changes are prevailing in the banking sector as
per changes in economy and preference of customers.
The improved organization focus, flexibility and improved action orientation are the benefits
of scenario planning. It would provide a substantial advantage to the NAB in guaranteeing
market share and revenue stability. The other type of planning is management by objectives
which is a technique and can be seen implemented at NAB. The management by objectives
intends to improve the performance of the company by defining objectives which are agreed
by both management and employees. It encourages contribution and commitment among
employees and aligns objectives across the organization (Tuczek, Castka & Wakolbinger,
2018). Rather it is a commitment which reflects what will be achieved in what time frame
and the way in which success will be measured and performance results will be reviewed.

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According to a report, NAB announced to take next step in business transformation. The bank
is reshaping it’s workforce for the future. As a result, 6000 would be leaving the bank with
the creation of 2000 new roles (NAB, 2018). It is a three-year process. It can be considered
an example of management by objectives (MBO) between the board, executive and
shareholders.
A clear focus on customer culture and experience was reinforced in 2016. The changes are
made by NAB in the organisational structure to create a simple and more focused
organisation along with association of strong culture (O'Neill, Beauvais & Scholl, 2016). The
corporate governance practices of NAB provide the foundation for effective decision making
and accountability in the execution of strategy. NAB has compiled with the 3rd edition of
ASX corporate governance principles and recommendations in the year 2016 (National
Australia Bank, 2016). There is clear structure of government with defined separation of
duties and responsibilities outlining the roles and responsibilities in the company. There is
charter which is published by NAB explaining duties, responsibilities and functions of board
and how it will be structured and how the performance is going to be reviewed and measured.
The duties are also distinct for the positions like chairman, group chief executive officer and
non-executive officer. The level of structure, process and strategies reveals the organisation
functions of NAB. The board and management group at company includes Kenneth R Henry
AC (Non-executive director and chairman), Andrew G Thorburn (Group chief executive
officer), David H Armstrong, Philip W Chronican, Peeyush K Gupta, Anne J Loveridge,
Gzeraldine C Mcbride, Doug A Mckay, Ann C Sherry and Anthony K.T.Yuen (Non-
executive director). It can be expected that with the standard functions of operations, staff,
strategy and technology similar level of executives will exist to offer leadership across areas
(Amanchukwu, Stanley & Ololube, 2015). It is totally fine to publish organisation structure
available to the public. It is totally reasonable to believe that functional areas of
improvement, established business and public care support and services have additional
management structure. . Fayol’s scalar chain principle of maintaining a clear line of
communication in the company from top to bottom may be sustained (Edward, 2017). The
unity of unity of direction is unlikely to maintain where one person is required to be in charge
of all activities that have same performance objectives. The functions of information
technology, human resources and strategy impact other areas of the company. These should
by all the rights identify the same level place to ensure conflicts in the objects. The targets
should be managed and resolved appropriately. . In the case of NAB, the positions discussed

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above exist in the performance of company. There is executive leadership in the
organisational structure of company.
Ethical decision making
There is increased pressure for NAB to conduct it’s operations in an ethical and socially
responsible manner. To practice this, the transparency of company is increased and insights
are offered that how the organization works and what it truly believes in (Maylor, Meredith,
Söderlund & Browning, 2018). The bank behaves in a professional manner to foster trust,
confidence and goodwill in customers, colleagues and community. There is a number of
policies which are published by NAB. These policies indicate the position of the company on
it’s ethical decision making. For instance
 Treat others with dignity, equality and respect.
 Comply with policies, laws, regulations and procedures applied to the organization.
 Information can be accessed related to work colleague and customers with
authorization which can be based on paper related.
 Keep accounts in order at all times and comply with terms and conditions applied to
any used product.
Decision making and corporate structure
NAB is a sound performing company when it comes to decision making and corporate
governance. The bank is providing strong revenue returns. It reflects that it uses sound
practices in planning, organizing and controlling process. The bank focuses on the area of
strength which is one of the aspects of excellent performance. Such performance leads to the
effective decision making.
The bank focuses on the sound growth strategy. It supports the mission of organization which
is important for execution. The structure seems spare but the given breadth of operations
suspects that more complex structure has been molded at the non-executive level (Meyers &
Van Woerkom, 2014). There is a clear example of Weber's perfection of bureaucracy with
the hierarchical structure, policies, processes, assigning duties and responsibilities. On the
other side, it can be said that the soft side of management and social responsibility has been
neglected to some extent.

Management Theory and Practice 9
Conclusion and Recommendations
NAB specializes in meeting the need of customers’ banking needs through it’s extensive
network. The development of bank in Australia accomplishes it’s mission. Further, the
strategic positioning of the company is done with the help of SWOT analysis. Finally, the
functional management of the company is described. NAB is recommended to:
 NAB is recommended to focus more on business and private banking. More priority
should be given to the SME customers.
 Personal banking can be modified into consumer banking and wealth management.
The distribution components of wealth management and personal banking can also be
included.
 The products and markets have become customer products and services. It can include
more section of strategy, digital, banking and wealth products.
 The technology and operations can include more operating functions of non-wealth
management business.

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