CX553001 - ASB Bank's Management: Culture, Structure & Environment

This report provides an in-depth analysis of ASB Bank in New Zealand, focusing on its organizational structure, culture, leadership, and management practices. It examines the external environment, including political, legal, global, socio-cultural, economic, and technological factors, as well as specific elements like customers, suppliers, competitors, regulators, strategic partners, interest groups, and employees. The report explores ASB's organizational culture, emphasizing its values and impact on performance, and assesses its mechanistic, centralized, hierarchical, and departmentalized structure. Recommendations for alternative structures, such as matrix and functional organizations, are provided. The report also touches on sustainable business practices and ethical decision-making within the bank.

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Table of Contents
Introduction.................................................................................................................................................3
External Environments................................................................................................................................3
General Environment..............................................................................................................................3
Specific Environment...............................................................................................................................5
Organizational Culture.................................................................................................................................6
Impact of Culture on ASB Bank’s Performance........................................................................................7
Organizational Structure.............................................................................................................................7
Recommendations for Organizational Structures........................................................................................8
Matrix Organizational Structure..............................................................................................................9
Functional Organizational Structure........................................................................................................9
Incorporation of Sustainable Business Practices by Leadership and Stakeholders....................................11
Payment of Government officials..............................................................................................................11
Conclusion.................................................................................................................................................12
References.................................................................................................................................................13

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Introduction
Nowadays, it is very important for the organizations to manage its all internal and external
components so that it can stay competitive in the perspective industry. Primarily, they need to
emphasize on effective management of its internal components like organizational structure,
organizational culture and other related practices. The major objective of this report is to conduct
an extensive research on ASB bank in New Zealand on its organizational structure, culture and
its leadership and management planning functions. ASB bank is one of the most popular banks in
New Zealand that was established in the year 1847 as Auckland Savings Bank. This bank is
owned by Commonwealth Bank of Australia. It offers a variety of financial services including
rural banking, business retail, fund management, investment, securities and insurance services. It
also runs BankDirect that is a branchless services of banking which provides services through
internet, phone, ATMs and EFTPOS only (ASB Bank Limited, 2018). ASB has a history of more
than 150 years of service to New Zealand’s population and it is among the leading banks of the
country. The below report includes the discussion about the external environment of ASB, its
organizational structure and culture, sustainable business practices and ethical decision making
process adopted by the chosen organization.
External Environments
The external environment of ASB Bank can be evaluated by using below-given 12 factors of its
both general and specific environments:
General Environment
Political/Legal
In New Zealand, Reserve Bank of New Zealand supervises its banking system. It is the body that
develops and implements monetary policies, manages issuance of currency, regulates the banks
etc. These factors have positive impact on the business operations of ASB Bank as the
liberalization of New Zealand’s government has finished most of the restrictions on ownership

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and activities of banks (Alvesson, 2016).. This bank operates on “at your own risk” policy for
both the depositor and management. It indicates that this bank is free from the interference of
government rules and regulations.
Global
In today’s business environment, banks have become global increasingly so global environment
may have a huge effect on its profitability and operations.ASB Bank is owned by an Australian
Bank i.e. Commonwealth Bank. For its globalized business, the company has hired a team of
international business experts who offer specialized services such as foreign exchange
management, trade finance and bank guarantees. There are some factors of globalization which
have adverse impact on growth of ASB like disruption in market, corporate lending and bad debt
expenses.
Socio-cultural
ASB is playing an important role in assisting the communities by providing its financial services
and literacy programs. For youth and adults, the bank is providing a great access to the
educational facilities primarily in financial literacy. These actions of company have positive
impact that they are continuously strengthening their bonding with the society.
Economic
In the year 2017, banks have made a contribution of $7.2 billion to the economy of New
Zealand. Country’s economic growth has a significant impact on profit and revenue generation
potential of ASB Bank. Economic environment for ASB is moderate as increase in the fuel
prices is adding pressures on household incomes. It may have adverse impact on the fund
generation of ASB bank (ASB Bank Limited, 2018). However, economic environment of
country makes ASB efficient and well-capitalized because its banking system has sufficient
buffers of liquid assets, capital and stable funds.
Technological

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Technology is one of the most important factors that have positive impact on organizational
growth. By using advanced technologies, ASB Bank has started its operations using internet,
phone, ATMs and EFTPOS. It helps the organization to increase its brand presence and increase
its customer base through online services (Alvesson, 2016).
Specific Environment
Customers
ASB bank is one of the largest banks of New Zealand that currently has over 1.3 million rural,
business and personal banking customers. Customers are very important for the organization’s
business as ASB needs to make changes in their financial and banking services considering their
needs and expectations. For example, it has introduced its branchless services looking at people’s
interest towards digital services (ASB Bank Limited, 2018).
Suppliers
ASB has various suppliers who support it in conducting its operations in New Zealand’s banking
industry. One of the major suppliers of this bank is IT companies which provide its software and
technologies to practice banking activities and accounts. Moreover, other suppliers arethe stores
which supply the stationary and other required resources to process banking services.
Competitors
The major competitors of ASB are Kiwi Bank, Westpac, NAB and ANZ Bank Limited. They
pose intense competition on ASB’s operations as they have to make changes in their processes
and strategies considering their competing brands. It assists them in retaining their customers for
a long time (Wilson, Zeithaml, Bitner, & Gremler, 2012).
Regulators
The banking system in New Zealand is regulated by Reserve Bank of New Zealand. It has given
various policies and standards which this bank needs to meet so that it can reduce the bank
failures.

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Strategic Partners
ASB is owned by Commonwealth Bank of Australia and it has its partners in different countries
like India, China, Korea and Indonesia. These strategic partners assistASB in attaining its
ambitions and goals.
Interest Groups
Environmental conservation groups are the major interest groups who are working for residential
development of New Zealand’s cities. These groups are making pressure on bank that they
should engage in environmental and corporate social responsibilities.
Employees
Currently, ASB has around 5000 employees who are working for the benefits of ASB bank.
They are very critical to the organizational performance as they are providing financial and
banking services to customers on behalf of ASB (ASB Bank Limited, 2018).
Organizational Culture
Organizational culture is a system of shared values, beliefs and assumptions that regulates how
the people behave in an organizational environment. It plays an important role in effective
management smooth operations of company (Alvesson, 2016). ASB’s organizational culture is
an important factor in continuing growth and success of its banking business. The corporate
culture of ASB bank is developed by incorporating different values such as integrity, passion,
innovation, ambition, care, respect and support. The organization is engaged in hiring an
unbeatable team that can provide unbeatable experience to its customers. In New Zealand, ASB
Bank is very popular for its great team culture. Whether the employees are working in national
sales, branch network or head office, they feel its identifiable and strong culture where the
emphasis is to get success.
ASB has shown its culture through its business processes and workplace environment. It can be
seen that by developing a team culture, the firm involves its employees in its decision making
process. At ASB, the voices and opinions matter a lot so they provide different ways to take their

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feedback for example; annual People and Cultural survey. By doing this, it provides a highly
engaged and world class workplace to its employees (Alvesson & Sveningsson, 2015).
Employees can learn organizational culture in different ways. Training is one of the best ways to
transmit culture into employees. The organization can conduct training program and trainer who
can effective pass the culture to new employees. Examples are the other ways which can help top
managers to make the employees learn about their cultural values and beliefs. Moreover,
employees can learn the culture through the guidance of senior managers (ASB Bank Limited,
2018).
Impact of Culture on ASB Bank’s Performance
ASB’s organizational culture has a great positive impact on its performance. The employees of
the bank are very much engaged in its business practices that led the organization towards its
business goals. It continuously strives to innovate its operations with advanced technologies as it
believes that having best systems and technologies to work is vital for employees so that they can
attain their best. For instance, its branch banking system is one of the best systems across the
world. The values and vision has emphasized on outshining in customer service in addition to
measuring employee engagement. It measures customer engagement via response from around
28,000 clients every year and assists us to make sure that each interaction with the customers
creates a positive relationship (Watson, 2016). It helps the organization to retain its customers
and generate significant revenues in world banking industry. Thus, organizational culture of ASB
has positive effect on its performance.
Organizational Structure
Organizational structure of a company is a system that is used to describe a hierarchy within an
organization. It recognizes every job, function and to which it report in organization (Ashkenas,
Ulrich, Jick & Kerr, 2015).
(a) Mechanistic or organic
By researching bank’s websites, it can be stated that ASB Bank has mechanistic organizational
structure that is very much like a bureaucracy and it has high formalization, departmentalization,
a restricted data network etc. The organizational structure of this bank depicts that it has this type

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of structure with fixed duties, strong hierarchical relationships, higher formalization, and
centralized decision making process and formalized channels of communication. In contrast to
this, it does not use organic structure as it is very much boundary less with changeable duties,
informal communication and collaboration.
(b) Centralised or decentralised
In New Zealand, ASB Bank adopts the centralized organization structure where the senior
manager’s power is stronger. At ASB, centralized structure is used that is a setup where the
power and decision making responsibilities are given few of its leaders. In this, ASB Bank has
hired its own primary decision making executives in its central headquarters with offices. It has
meeting areas for its executives to discuss about the operations and activities.
(c) Hierarchical and departmentalised
Hierarchical organizational structure is a systematic structure in which the power flows upward
and vertically and all the workers are departmentalized. In this structure, all of the employees
need to follow a chain of command. ASB has strong hierarchical relationships and it has
managed all the departments as per their levels like top, middle and lower level. Also, ASB’s
structure is divisional with instituting different branches with managers who manage and control
its operations. Its different divisions promote team culture and every department has a delegated
HR function. At ASB, there are different departments like risk management, technology and
operations, communications, corporate banking etc. This structure plays a coordinating role at
business unit and corporate levels.
(d) Span of Control
The term Span of control indicates the number of employees who are responsible to report to one
supervisor in the hierarchy. The organizational structure of ASB Bank shows that this bank has a
narrow span of control where the top manager controls very few employees in every branch of
ASB. It allows the bank to gain different advantages like it enables its managers to interact
quickly with their subordinates (Taherparvar, Esmaeilpour & Dostar, 2014). They can control
them very easily. Secondly, they can take effective feedback of employees and can work on

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them. Thus, the span of control of ASB is impactful that can assist it to manage the functions of
managers.
Recommendations for Organizational Structures
Apart from above organizational structures, ASB Bank can use two other organizational
structures in its banking operations. These structures are stated below:
Matrix Organizational Structure
ASB could adopt matrix organizational structure. It is the type of structure in which the reporting
relationships are managed as a matrix or grid, not as a traditional hierarchy. If this organization
will adopt this structure, it will be able to foster environmental change and adaptability on global
level. Currently, the company has a limited information network that is the major reason behind
implementation of this structure. Under this structure, the employees will be in contact with
several people that will assist in sharing the data. It will speed up the ASB’s decision making
process. The major benefit of this organizational structure will be that it will maximize the
effectiveness of bank’s services and operations (Lemon & Verhoef, 2016).
Functional Organizational Structure
Another structure is functional organizational structure that could be used by ASB Bank. By
using this structure, the organization can departmentalize its workplace on the basis of common
functions of job. In these departments, the middle and lower level employees can besupervised
by the top managers in the same field. For example, this bank has different functional department
managers General Manager marketing, General Manager banking services, General Manager
Finance and accounting, General Manager Human Resource, quality managers, service managers
and investment. The major reason behind using this structure is that it lacks effective
management of its all the departments and other activities. The major benefit of this is that all the
employees of bank will be grouped by their skills and knowledge that will assist it in attaining
higher level of performance (Cohn, Fehr, & Maréchal, 2014).
Impact of Mechanistic Structure
As mentioned above, ASB Bank has mechanistic type of organization structure in its workplace
environment that has various effects on its management practices. Mechanistic organizational

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structure is the structure that is bureaucratic and hierarchical in nature. The roles, structure and
processes are reflected as a machine in which every part performs the task what it is purposed to
do. It has a well-defined, clear, authority, control, centralized and vertical hierarchy of command
(Lee, Kozlenkova & Palmatier, 2015). It would have positive impact on management practices of
ASB as it will increase its operational efficiency while reducing the costs via centralized decision
making process. The major feature of this structure is formalization that would assist ASB in
enhancing its performance in banking industry. This type of structure is very strict that will
support ASB bank in managing its management practices effectively.
Changes in Span of Control
Span of control can be defined as a number of subordinates which a supervisor or manager can
control directly. At ASB Bank, if there will be changes in the span of control than it will have a
huge impact on management. It will affect the organization’s time to take the decisions and its
cost structure (Hogan & Coote, 2014). If there will be higher span of control then there will
fewer levels of management. It will lead the bank to make faster decisions due to fewer levels. It
will help the ASB Bank to respond very fast to the issues faced by this organization. In this
situation, the workers have very few levels for approvals. There will be better communication
among the managers and workers on other levels. In this way, the changes in span of control can
impact the managers and workers of ASB Bank.
Advantages of centralised and decentralised structure
Centralised Structure
 The major benefit of this structure is that it reduces the chances of conflict situation
among employees.
 At ASB, there will be fast execution of actions and strategies as there are fewer people
involved in the process.
 All the major decisions are taken by assigned leaders and managers (Harper, 2015).
Decentralised Structure
 It empowers the employees to make their decisions with autonomy and they feel more
engaged in organizational significant decisions.

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 By using this structure, ASB will be able to make more efficient decisions than
centralized structure.
 It can allow the ASB to operate a new branch as an independent entity.
Incorporation of Sustainable Business Practices by Leadership and
Stakeholders
ASB Bank is engaged in various sustainable business practices which helped the organization to
establish a brand image in New Zealand and other countries. The organization is committed in
managing its effect on environment effectively and responsibly while assisting to build a
sustainable future for the population of New Zealand (ASB Bank Limited, 2018). It has taken
various initiatives for environmental sustainability like:
 Recycling and waste reduction program
 Automated overnight computer shutdown for all employees
 Upgrades to air conditioning and lighting in branches (Shapiro & Stefkovich, 2016)
 Reduction in the paper use
 Green technology projects for enhancing the energy efficiency
 Inspiring the employees to utilize the phone and video conferencing instead of air
travelling (ASB Bank Limited, 2018)
It indicates that sustainability is the central to the business practices of ASB Bank. At ASB,
leaders and other stakeholders can take different actions to attain sustainability like they can
motivate their community people to protect the environment. Moreover, they can use online tools
and technologies so that they can reduce the use of paper (Bouma,, Jeucken & Klinkers, 2017).
Payment of Government officials
Payment of government officials is considered as an ethical issue because it can lead the
organization to give bribe to those officials. There are various firms which are engaged in these
ethical issues like bribery (Ferrell & Fraedrich, 2015). Bribery is where large sums are offered to

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government officials to secure a contract. There may be involvement of both local and foreign
government officials. In this situation, the payment is done to officials with a corrupt objective to
induce him/her to misuse his/her authority (Cavico & Mujtaba, 2010). As a banking corporation,
if ASB Bank is committed in any legal and moral issues like distortion of tender process and
materials used favouritism of suppliers then it will have bad impact on the brand image of bank
in New Zealand and other countries. By using favouritism of suppliers, this bank can give
preference or advantage to the suppliers who are their friends and part of their family. It can have
huge impact on the cost structure of the bank as they need to purchase the materials on the prices
offered by the suppliers (Lock & Seele, 2015). The organization will not be aware about the
changes in the market and the prices of suppliers.
One of the biggest ethical issue in which ASB was engaged in that high court of New Zealand
found that Commonwealth Bank of Australia is using ASB as a Laundromat via that it has
washed its illegal transactions every year so that they can avoid the NZ taxes (The conversation,
2017). It fed into the group profits of CBA directly. Due to this, ASB was fined with a huge
amount of penalty. As per utilitarian view point, this bank should engage in the right things and
it should avoid the bad practices which may have impact on its internal and external
stakeholders. Behaviour of employees and managers will contribute to the greatest good of most
of the people and interests of entire society (Chiu, Wang, Fang & Huang, 2014). According to
individualism viewpoint, ASB has the right to act as an autonomous agent of CBA. In this way,
the organization can handle different issues by using viewpoints of ethical behaviour.
Conclusion
From the above analysis, it can be concluded that ASB Bank in New Zealand is using effective
organizational culture and structure which support the organization in managing its operations
effectively. The organization should make some suggested changes in its organizational structure
and processes. By using ethical viewpoints, the company should try to avoid coming into any
unethical practices.

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