Impact of Cryptocurrency on ANZ Group: A Strategic Management Report

This report offers a strategic analysis of the ANZ Group, a major banking institution in Australia and New Zealand, examining the impact of cryptocurrency on its operations and strategic decision-making. The assessment utilizes the Industrial-organizational model, PESTLE analysis, and Porter’s Five Forces framework to evaluate the external factors influencing the company. The report explores the political, economic, social, technological, legal, and environmental factors (PESTLE) and analyzes the competitive environment using Porter's five forces, considering the threats and opportunities presented by the emergence of cryptocurrencies. It highlights the challenges posed by digital currencies, including shifts in customer behavior and increased competition. The analysis also considers the company's strategic background, environment, and current decisions, concluding with suggestions for addressing the risks associated with cryptocurrency in the Australian and New Zealand markets.

Strategic
Management

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Executive summary
This assessment reflects the role of the strategic management in an organization. The term
strategic management refers to as the formulation and implementation of the prior targets and
initiatives that are made by the high-level management. It is essential for the company to make
the strategic decision after considering the changes in the external environment because the
company gets affected due to the external environment. The company on which the report is
based is ANZ group which is a well-known group in Australia and New Zealand. The operations
and the strategic decision of the company get affected due to the emergence of the
cryptocurrencies in the market. This assessment will evaluate the impact of external factors on
the company with the help of the PESTLE and Porter’s five forces framework.

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Contents
Introduction......................................................................................................................................3
Strategic background.......................................................................................................................4
Strategic environment......................................................................................................................4
Industrial-organizational model (I/O)..........................................................................................4
Diamond model...........................................................................................................................5
PESTLE analysis.....................................................................................................................5
Porter’s five forces...................................................................................................................8
Strategic analysis...........................................................................................................................10
Conclusion.....................................................................................................................................12
References......................................................................................................................................13

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Introduction
This paper reflects the details related to the strategic dilemma of the company that is Australia
and New Zealand Banking Group which is formed by the presence of the cryptocurrencies in the
market. The report shows major includes the strategic background, strategic environment with
the help of the industrial organization model, competitive environment and the strategic analysis
of the company. These all theories, framework, and model are used to analyze the external
influences by the cryptocurrencies on a company. In the end, the paper reflects the suggestions to
the company for addressing the risk generated by the digital currency in the market of Australia
and New Zealand.

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Strategic background
ANZ Groups is well-known groups in the market who perform its banking operations in both
Australia and New Zealand market. The company came into existence 180 years ago with the
head offices in Melbourne, Australia (ANZ Group, 2018). The group work with an objective to
provide the effective banking and financial services that contribute to shape the communities and
the people thrive. This is the only way through which the company can contribute in forming the
balanced and maintainable economy with the help of which the people can enhance their life
(ANZ Group, 2018). This section of the report also includes the major current decisions that are
formed by the company. ANZ group has recently announced that they had reached an agreement
to sell its 55% stake in Cambodian JV ANZ Royal Bank to J Trust, a well-known Japanese
diversified financial holding company that is also listed on the Tokyo Stock Exchange (Reuters,
2018).
Strategic environment
The section of the report includes the analysis of the external environment factors that influence
the company. This strategic environment is explained with the help of the Industrial-
organizational model and diamond model.
Industrial-organizational model (I/O)
This model accepts an external perspective to describe that outside forces of the company signify
on the strategic actions of the firms. This model is based on the assumption related to the
external environment, competition in an industry, resources and the decision making of the
company (Kraaijenbrink, Spender and Groen, 2010).

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Diamond model
The diamond model of the porter is used to understand the competitive position of the nation in
the global competition. This model is used to integrate Porter's five forces theory with the
competitive advantage (Riasi, 2015).
These models provide a path through which the company can easily analyze the external factors.
Industrial-organizational model (I/O) is used in the PESTLE analysis mainly and the diamond
model is used in Porter's five forces model. Considering the model below given is the analysis of
both PESTL Analysis and Porter’s five forces: -
PESTLE analysis
PESTLE is one of the essential elements of the general external analysis that is including in the
IO model (Pavlovski, 2015). This analysis has been conducted to analyse the factors like
crypotocurrency that affect ANZ group working. The below given is the factors that influence
the company: -
Political factors
The political factors include the impact due to change in the rules and regulations of the
government considering the IO model. The geopolitical environment of the countries influences
the banking services of the ANZ group. The government of New Zealand and Australia are
together performing the numerous activities together which reflect they have strong political
terms. The rules and regulations of both the countries support the operations of ANZ group
(ANZ Group, 2018). Though, the operations of Australia are affected because of the acceptance
of cryptocurrency. The government of Australia has decided to accept the use of the
cryptocurrency and the people have started making the use of it (Bajpai, 2018). This has clearly

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created an impact on the profitability and operations of ANZ. The nature of the cryptocurrencies
states that this is a threat or risk for the existence of the hard currency. Apart from Australia,
there are many other countries who have accepted the use of cryptocurrencies. If the New
Zealand government will allow the use of the digital currency in the market then the operations
of the ANZ Group in the NZ will also get affected.
Along with this, the Royal Commission into Misconduct in the Banking, Superannuation and
Financial Services Industry every banking companies should follow the guidelines and ensure
that no misconduct activity is one of them. If any of the decision is formed by the Royal
Commission then the ANZ group will get affected.
Economic factor
According to IO model, GDP of the country is one of the important elements of the economic
factors. The economy of Australia is largest mixed market economies in the world with the GDP
of AUD$1.69 trillion by the year 2017. On the other hand, the GD P of New Zealand is US$
186.4 billion by the year 2017. The GDP of both the companies is improving which is a positive
sign for the ANZ Group. The rise in the GDP of the company leads to the increase in the
purchasing power of the company. The emergence of the cryptocurrencies has attracted the
people and by taking the advantage of the purchasing power they invest a huge amount in digital
currency (Pavlovski, 2015). This impact the working of ANZ Group along with this the supply
of the money in the industry of banking and finance. This will also enforce the company to make
the decision which will help them to grab the attention from cryptocurrencies to hard currency.
Social factors

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ANZ group offer customers attractive services such as loan at low-interest rates, credit card
benefits, investment and many others. The customers rely more on financial institutions because
this is trustworthy for the company. Moreover, most of the people in Australia and New Zealand
found that these institutions provide good knowledge related to the investment of their amount
(Dermine, 2017). Though, this is also a fact that most of the people in the current scenario are
investing the amount in Cryptocurrencies because they have found the heavy fluctuations in the
prices due to which they can earn good profit. This has reduced the dependency and the change
in the behavior of customers towards the banking industry due to high cost which is a threat to
ANZ group. These currencies save the price of cost which they pay in banks (Cocco, Pinna, and
Marchesi, 2017).
Technology factors
Technology has created the major impact by bringing the changes in the ways for handling the
funds. The customer found smartphones through which they can handle their funds effectively
from any location. ANZ group offer all the available services with the advanced technology
(Chuang and Hu, 2015). Moreover, the group makes use of technology in communication as
well. On the other hand, the Satoshi Nakamoto paper on bitcoin reflects the technology has
brought the cryptocurrencies with the help of blockchain technology (Fanning and Centers,
2016). This currency is one of the peer-to-peer cash transaction systems. This emergence of
blockchain technology has brought the way through which the people can manage their fund
without involving any party or financial institution or government. Moreover, the customers can
manage their own wallets and can transfer the funds with the help of digital signature (Nowiński
and Kozma, 2017). This might influence the operations and work of the company.

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Legal factors
According to IO model, the tax and regulations are one of the important aspects of the legal
factors. ANZ group fulfills all the legal obligations through which they can perform the business
operations effective. The group works under both Australian and New Zealand banking act along
with this, the group also implement the Corporation Act. The company legalized the use of one
of the well-known cryptocurrencies that are bitcoin (Bajpai, 2018). Though, the customers who
are making use of this currency also have to pay taxes.
Environmental factors
ANZ ensues that they obey all the obligations related to the environment and social policies
related to bring the welfare of the society. ANZ group promotes less use of the paper for which
they make use of the updates and advanced technology (ANZ Group, 2018). This factor doesn't
create any influence on the operations of a company.
Porter’s five forces
This model evaluates the competitive environment of the market in which ANZ group operates
its business activities (Dobbs, 2014). This analysis has been conducted to analyse the factors like
crypotocurrency that affect ANZ group working. This framework is related to the Diamond
model.
Threats of New Entrants  ANZ group do not have threats of new entrants because
there is less number of entrepreneurs who like to spend
the huge amount of opening more.
 The company doesn't have threats if any company take a
step to enter because ANZ group has a good reputation

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and large customer base (ANZ Group, 2018).
 The company has threats from the cryptocurrency
emergence in the market because this digital currency has
attracted the people and businessmen including well-
known companies.
Threat of substitutes  The threat of substitute in high in Australia for the group
because of the legalization of the digital currency in
Australia.
 ANZ group also found the threat from the institutions
who offer some sort of service to customers.
Bargaining power of suppliers  ANZ bank suppliers are reserve bank of Australia and
New Zealand who offer the support and work as the
backbone and this is the competitive advantage of the
company considering the diamond model.
 There is less bargaining power of suppliers because the
RBA is regulated by the government (ANZ Group,
2018).
 Apart from reserve bank, the suppliers of the company
include customers and businessmen who deposit their
amount or invest their amount. After considering this
point, the bargaining power of suppliers is high because
most of the businesses and customers have switched to
cryptocurrency.

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Bargaining power of customers  The bargaining power of the customers is high for the
ANZ group in both the markets as the customers can
easily switch to the other banks (AMP bank,
Commonwealth Bank of Australia, and many others) who
offer the similar services to the customers and
businessmen.
 Apart from this, there are numerous customers who can
easily switch towards the cryptocurrency that are
available in the market. In addition, there are many
customers who make use of this currency for the criminal
activities.
Rivalry among the Existing
Competitors
 There is intense rivalry among the existing competitors is
available in the market which is faced by the ANZ group
in the present market.
 Moreover, the rise in the use of the digital currency by
traders and citizen also appears as competitors.
Strategic analysis
This analysis reflects the strategic dilemma that is faced by the ANZ group because of the
emergence of cryptocurrency in the market. The emergence of cryptocurrency appears as the risk
factor for the company (Knezevic, 2018). The legalization of this currency is one of the biggest
because due to this many people, investors and businessmen are investing and performing the
trading activities with the help of digital currency which eliminates the role of banks and the use

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of the hard currency in the market. The elimination of the role of banks and hard currency is one
of the risks (Raymaekers, 2015). Moreover, this will reduce the dependency on banks along with
this, the market will include the unnecessary flow of money which is essential to stop otherwise
the inflationary condition will arise. In addition, this currency is a risk towards the profitability
of the company.
Recommendations
It is suggested to the company generate the awareness among the people about the disadvantages
associated with the use of cryptocurrency such as this leads to unnecessary supply of money in
nation, the high price fluctuation might lead to loss in investment, the digital currency is
generally used by people who are involved in the criminal activities and many other. The
government should ensure the use of cryptocurrencies in the market doesn’t lead to the
elimination of the hard currency. The reserve bank should contribute to managing the flow of
money in the market.

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Conclusion
In the end, the report includes the analysis that there are numerous external factors due to which
the company needs to bring the changes in their decision making. The major factors which
created the impact on the financial operations of the company are an introduction of
cryptocurrency. This digital currency has created an impact on the working of the banking
industry and ANZ group. The legalization of the currency leads to the risk of elimination of hard
currency. Along with the social behavior of people has changed which created the risk for the
group.

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References
ANZ Group (2018) About ANZ [Online]. Available from: http://shareholder.anz.com/our-
company/profile?_ga=2.44436707.690094383.1526027865-973082256.1526027865 [Accessed
on 19th May 2018]
ANZ Group (2018) ANZ Shareholder Centre [Online]. Available from:
http://shareholder.anz.com/our-company/profile/history?
_ga=2.44436707.690094383.1526027865-973082256.1526027865 [Accessed on 19th May 2018]
Bajpai, P. (2018) Countries Where Bitcoin Is Legal & Illegal (DISH, OTSK) [Online]. Available
from: https://www.investopedia.com/articles/forex/041515/countries-where-bitcoin-legal-
illegal.asp [Accessed on 19th May 2018]
Chuang, C.C. and Hu, F.L. (2015) Technology strategy-innovating for growth of ANZ
Bank. International Review of Management and Business Research, 4(3), p.682.
Cocco, L., Pinna, A. and Marchesi, M. (2017) Banking on Blockchain: Costs Savings Thanks to
the Blockchain Technology. Future Internet, 9(3), p.25.
Dermine, J. (2017) Digital disruption and bank lending. European Economy, (2), pp.63-76.
Dobbs, M. (2014) Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review, 24(1), pp.32-45.
Fanning, K. and Centers, D.P. (2016) Blockchain and its coming impact on financial
services. Journal of Corporate Accounting & Finance, 27(5), pp.53-57.

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Knezevic, D. (2018) Montenegrin Journal of Economics. Montenegrin Journal of Economics,
p.109.
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