Strategic Management in the Banking Sector

This assignment delves into strategic management within the banking sector, focusing on Westpac. It examines how Westpac applies core strategic concepts like risk management, corporate social responsibility, and customer experience management in a competitive environment. The analysis draws upon Porter's Five Forces, corporate sustainability governance models, and real-world examples from the bank's annual reports.

Running head: STRATEGIC DEVELOPMENT WITHIN WESTPAC COMPANY
Strategic Development within Westpac Company
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1STRATEGIC DEVELOPMENT WITHIN WESTPAC COMPANY
Executive Summary
The objective of the paper is to analyze the strategic development initiatives of Westpac
Company. Corporate mission of Westpac Banking Corporation is to deliver its vision of offering
high returns to its shareholders along with developing effective and offering comprehensive
range of financial goods and services that supports the comment in addressing financial needs of
consumers. It is gathered from the paper that integrating business horizontally strategy through
bring some of the competitors along with purchasing the retailer and wholesaler has facilitated
the bank in expanding business in other territories.

2STRATEGIC DEVELOPMENT WITHIN WESTPAC COMPANY
Table of Contents
1. Introduction......................................................................................................................3
2. Development of Organization with Corporate Strategies................................................3
2.1. Mission, Vision and Core Competencies..................................................................3
2.2. Successful Strategies in Past.....................................................................................4
2.3. Current Strategies.....................................................................................................5
3. Criticism of Business Practices of Westpac Company....................................................6
4. Environmental Analysis of Westpac Company...............................................................7
4.1. PESTEL Analysis.....................................................................................................7
4.2. SWOT Analysis........................................................................................................8
5. Culture and Leadership Style of Westpac Company.......................................................9
5.1. Competencies of Core Values of Westpac Company...............................................9
5.2. CEOs those Implemented Strategies and Developed Company Culture................10
6. Conclusion.....................................................................................................................11
References..........................................................................................................................12

3STRATEGIC DEVELOPMENT WITHIN WESTPAC COMPANY
1. Introduction
Strategic development can be considered as plan in communicating within the company
with considering organizational goals along with actions developed to attain attained by
important aspects prepared within the planning process (Campbell and Reyes-Picknell 2015).
Westpac Banking Corporation is positioned as an Australian financial services provider and bank
that has its headquarter in Sydney the Westpac place. This resulted in evaluation of Westpac
Company’s global sustainability leader within the banking sector (Bouma, Jeucken and Klinkers
2017). The bank has its business operations across five divisions such as business bank,
consumer bank, Westpac institutional bank and Westpac New Zealand. It is positioned as among
the Australia’s best four banks. The objective of the paper is to analyze the strategic development
initiatives of Westpac Company. Moreover, the paper also intends to analyses the corporate
strategies followed by the company along with cruising the effectiveness of those strategies. In
addition, environmental analysis along with culture and leadership style followed by the
company will also be evaluated.
2. Development of Organization with Corporate Strategies
2.1. Mission, Vision and Core Competencies
Corporate mission of Westpac Banking Corporation is to deliver its vision of offering
high returns to its shareholders along with developing effective and offering comprehensive
range of financial goods and services that supports the comment in addressing financial needs of
consumers (Caraiani et al. 2017).

4STRATEGIC DEVELOPMENT WITHIN WESTPAC COMPANY
Corporate Vision of the banking company is to position itself as the world’s superior
service companies along with facilitating the consumers, community along with people to
prosper and develop (Hirt and Willmott 2014).
Westpac Banking Corporation has strong operating momentum within core retail along
with business banking that supports medium income growth despite of modest credit growth
(Channon and Jalland 2016). It offers competitive advantage to the bank though presenting low
income/cost ratio along with having the lowest loan write-off experience of key banks.
Five major core competencies of Westpac Banking Corporation includes:
 One team
 Delighting consumers
 Achievement
 Courage
 Integrity
2.2. Successful Strategies in Past
Vertical and Horizontal growth strategies of Westpac Banking Corporation facilitate in
realizing the previous successful corporate strategies of the bank (Deresky 2017). Vertical
successful strategies of the bank are mentioned below:
 Generating more sales through selling more to the existent consumers, providing
consumers with complementary products and services, promoting new services and
products along with distributing e-newsletters to consumers. These strategies were
successful in developing the company’s tailored growth (Grinblatt and Titman 2016).

5STRATEGIC DEVELOPMENT WITHIN WESTPAC COMPANY
 Finding new consumers through encouraging referrals, networking, focusing in advising
along with connecting online with consumers has been successful strategies that has
facilitated the bank in developing new and improved services and has attracted huge
consumer base (Hirt and Willmott 2014).
Successful horizontal growth strategies of the company are explained below:
 Entering new markets strategy through opening more locations, expanding business in
other geographical occasions along with developing new pricing structure has been
effective in attaining high business growth in international trading (Grougiou et al. 2014).
 Integrating business horizontally strategy through bring some of the competitors along
with purchasing the retailer and wholesaler has facilitated the bank in expanding business
in other territories (Hirt and Willmott 2014).
2.3. Current Strategies
Emergent Strategies of Westpac Banking Corporation that is considered by the company to
be successful in the future years is explained below:
 Digital transformation- The company has developed effective strategies in generating
21st century, digitized bank that will have multi bank capabilities (Hirst, Thompson and
Bromley 2015). Its current strategies also include simplifying processes through end-to-
end digitization and driving efficiency opportunities from consolidation and digitization
of systems.
 Targeted Growth- These current growth strategies is focused on pursuing the growth
opportunities along with putting increased focus on better growth in small to medium
organizations, wealth and Asia (Hirt and Willmott 2014). Moreover, sustainability

6STRATEGIC DEVELOPMENT WITHIN WESTPAC COMPANY
strategy of the company is focused on anticipating and developing most pressing
emerging social concerns in which the company has skills along with experience in
making a considerable difference and attaining business value. Moreover, the company’s
approach also facilitates in making sustainability part of the way the people conduct
business within the values, strategy, processes and culture (Hirt and Willmott 2014). A
major aspect in the company’s strategy includes portfolio of financial services brands that
facilitates the company in appealing to a wider consumer range along with offering with
strategic flexibility to provide solutions that better addresses needs of the consumers.
3. Criticism of Business Practices of Westpac Company
Despite having several effective corporate strategies, Westpac Banking Corporation has
encountered numerous criticism on its business strategies that are explained below:
Multi-brand strategy of the company is said to bring in money for the financial
institution. However, this strategy is observed to face criticism. Some of the analysts have
questioned this strategy of the bank explaining whether it is appropriate to be implemented in the
era of sluggish credit growth due to its additional cost in sustaining different brands (Klettner,
Clarke and Boersma 2014). Moreover, this strategy of Westpac Bank has come under criticism
from the credit unions, mutual banks and market analysts. They even have called for stricter
rules and laws on disclosure of the banks those owns alternative brands that claims certain
consumers are mot that aware of ownership structures. The CEO of the company has defended
the strategy and explained the analysts that the bank might carry on maintaining consumer
deposits aggressively as an aspect of the move to strengthen its balance sheet (Paynter, Halabi
and Lawton 2018).

7STRATEGIC DEVELOPMENT WITHIN WESTPAC COMPANY
The consumers also argued that the bank might have to gradually reconsider the
strategies of offering customers with a range of brands encompass Banks, Banks of Melbourne
and RAMS. Several consequences of this strategy resulted the company to reconsider the
strategy. After reviewing the company’s distribution footprint, the bank has not made
considerable efficiency gains (Peppers and Rogers 2016). The bank also shut more than 150
branches all across its networks within the regions in which there are overlap among the brands
and this strategy is not observed to suit the bank’s demographic target market (Hirt and Willmott
2014).
4. Environmental Analysis of Westpac Company
4.1. PESTEL Analysis
Pestle Analysis of Westpac Banking Corporation is conducted under:
 Political- The Australian government is centered on repairing budget relied on altering
economic condition as the economic advancement is anticipated to experience decline.
Moreover, the government has introduced four pillars policy for banks that ensures
sustaining suitable competition levels within banking industry and there must be
minimum four major banks (Purce 2014).
 Economical- Certain increase in business activity might be attributed to increase in non-
mining business surrounding, particularly service sector because of better resource
exports and household demand. Decreased interest rates have enhanced demand for
housing loans and new investment within dwelling. This facilitates growth in investments
and deposits (Riasi 2015).

8STRATEGIC DEVELOPMENT WITHIN WESTPAC COMPANY
 Social- Increasing requirement of aging population and distinct geographical segment
must be fulfilled by the bank in promoting consumer growth. The bank considered acting
on such lines for this geographical segment through having a dedicated team that can
manage self-managed super funds. Considering the labor markets of Australia to be
flexible, the unemployment rate might indicate a marginal boost initially and then decline
(Rogers 2016).
 Technological- With services digitization, the bank intends to increase pace of consumer
centered strategy. Innovative technology intervention within the services sector has
enhanced consumers banking experience. Moreover, in order to maintain confidentiality
of data the bank attained around 11% stake within Quintessence labs that is a specialist
for developing technology security (Rogers 2016).
 Environmental- Natural resources scarcity including land, trees and water in supporting
the food needs of growing population and certain energy crisis is important in analyzing
the natural resources value. The banks require considering these aspects for facilitating
several lending, investment and strategic decisions in long term growth promotion.
 Legal- There is a continuing class action suit against Westpac Banking Corporation for
charging increased penalties to household customers in case of late credit card payments
or exceeding limits of credit cards and making transactions with inadequate funds within
the account (Rothaermel 2015). The amount that is charged is deemed to be unfair by the
company, Maurice Blackburn.
4.2. SWOT Analysis
Strengths
 Increased customer growth
Weaknesses
 The company is dealing with legal

9STRATEGIC DEVELOPMENT WITHIN WESTPAC COMPANY
 Increased diversity of workforce
 Better operating performance
 Enhanced capital levels
 Considered to be positioned in the
Global 100 most (Hirt and Willmott
2014)
 Sustainable company in Davos in the
year 2014
 Improved asset quality
concerns (Hirt and Willmott 2014)
 Not addressing the expectations on
profit of the shareholders
Opportunities
 Digitization of services
 Expansion opportunities all across
several geographies
 Decreasing services and products
complexity (Hirt and Willmott 2014)
 Investment within companies for
better wealth management and data
security
Threats
 Mismanagement of risk
 Threats from business rivals
 Economic downturn (Hirt and
Willmott 2014)
5. Culture and Leadership Style of Westpac Company
5.1. Competencies of Core Values of Westpac Company
Core values and competencies that facilitates Westpac Banking Corporation in attaining
competitive advantages is explained below:

10STRATEGIC DEVELOPMENT WITHIN WESTPAC COMPANY
 The company’s core value is to position itself as the world’s best service companies
along with helping its consumers, people and communities to grow and prosper. This
value is maintained by the company through offering high return for the stakeholders that
develops effective and long lasting consumer relationship (Riasi 2015).
 Westpac Banking Corporation has strong operating momentum within core retail along
with business banking that supports medium income growth despite of modest credit
growth. It offers competitive advantage to the bank though presenting low income/cost
ratio along with having the lowest loan write-off experience of key banks (Strong, Cater-
Steel and Lane 2014).
 Strong profitability along with dependence on capital light mortgage growth continue
supporting the bank’s organic capital growth. Common equity Tier 1 capital goes beyond
the recent Basel 3 minimum requirements and the company is observed to be well settled
in addressing increased upcoming capital levels. Westpac Banking Corporation’s
effective momentum within housing growth additionally increases while businesses
lending momentum remained constant above the industry average (Strong, Cater-Steel
and Lane 2014). Retail deposits and total lending growth of the bank is observed to
remain more that the industry average.
5.2. CEOs those Implemented Strategies and Developed Company Culture
The CEO of Westpac Banking Corporation has inspired the employees of the financial
institution along with developing certain important strategies for maintaining effective company
culture. Brian Hartzer is the CEO of this company who has taken the initiative in developing
corporate culture focused on performance discipline, sustainability priorities, performance
discipline, workforce revolution and maintaining targeted growth (Westpac annual report. 2018).

11STRATEGIC DEVELOPMENT WITHIN WESTPAC COMPANY
CEO of the company follows culturally diverse leadership as it employs people from culturally
diverse backgrounds that brings them a wide range of exceptional skills, experience and ideas
from the employees. The CEO; s leadership has developed a culture of developing inclusive
workforce along with developing innovation foundation (Westpac annual report. 2018).
Moreover, the working environment of the company is focused on developing insists,
capabilities and perspectives the employees bring to work with them. Under the leadership pf
CEO, the company’s culture centers on the fact that five major core values are followed by the
employees:
 One team
 Delighting consumers
 Achievement
 Courage
 Integrity
6. Conclusion
The objective of the paper is to analyze the strategic development initiatives of Westpac
Company. It is gathered from the paper that the Australian government is centered on repairing
budget relied on altering economic condition as the economic advancement is anticipated to
experience decline. Moreover, the current growth strategies are focused on pursuing the growth
opportunities along with putting increased focus on better growth in small to medium
organizations, wealth and Asia. It is also gathered that Westpac Banking Corporation has strong
operating momentum within core retail along with business banking that supports medium
income growth despite of modest credit growth. It offers competitive advantage to the bank

12STRATEGIC DEVELOPMENT WITHIN WESTPAC COMPANY
though presenting low income/cost ratio along with having the lowest loan write-off experience
of key banks. Moreover, the paper elucidated that CEO of the company follows culturally
diverse leadership as it employs people from culturally diverse backgrounds that brings them a
wide range of exceptional skills, experience and ideas from the employees.

13STRATEGIC DEVELOPMENT WITHIN WESTPAC COMPANY
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14STRATEGIC DEVELOPMENT WITHIN WESTPAC COMPANY
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15STRATEGIC DEVELOPMENT WITHIN WESTPAC COMPANY
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