Strategic Management and Innovation Analysis of Bank of Queensland

This report provides a comprehensive analysis of Bank of Queensland's strategic innovation management. It utilizes Porter's Five Forces and PESTLE analysis to identify threats and opportunities, evaluates the current growth strategy using the Three Horizons of Growth, and assesses the portfolio of options with the BCG matrix and GE-McKinsey framework. Furthermore, the report examines an innovation opportunity pursued by the company using the MACS framework. The analysis covers various aspects of BOQ's business, including its competitive landscape, market attractiveness, and strategic choices, offering insights into its approach to innovation and growth in the banking sector.

Running head: BANK OF QUEENSLAND
Bank of Queensland
Name of the Student:
Name of the University:
Author note:

1BANK OF QUEENSLAND
Executive Summary
In the current world of fast moving and competitive business environment, the banking
organisation which fail to strategically and carefully plan for its future might not have much of
one. This paper has been elaborated on a discussion based of ample interpretation of Bank of
Queensland strategic planning. It has made use of various tools and matrix such as the Porter’s
five forces for industry analysis, PEST analysis to analyse the threats present for it in the market,
BCG and McKinsey GE framework for identifying and evaluating the portfolio and current
growth strategy of the bank. Furthermore, the MACS framework has also been applied in order
to evaluate one innovation opportunity that it is currently pursuing.

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Table of Contents
Executive Summary.........................................................................................................................1
Introduction......................................................................................................................................3
Discussion........................................................................................................................................3
1. Company Overview.................................................................................................................3
2. Need for Innovation.................................................................................................................4
2.1. Industry Analysis (Porter’s Five Forces)..........................................................................4
2.2. PESTLE Analysis.............................................................................................................5
3. Evaluating the current growth strategy....................................................................................7
3.1 The three horizons of Growth................................................................................................8
4. Evaluating its portfolio of options using:................................................................................9
4.1 BCG matrix........................................................................................................................9
4.2 GE-McKinsey Portfolio matrix.......................................................................................10
5. Innovation opportunity for the company...............................................................................11
References:....................................................................................................................................12

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Introduction
The term business strategy is referred to the important aspects of the businesses which
portrays the ability of an organisation to see its future growth and decline. The banking sectors is
in high need for a specific organisational strategy which would further enable the organisations
under the sector to move further and to expand themselves globally (Porter and Kramer 2019).
The main purpose of this paper is to analyse the strategic management of innovation of the firm-
Bank of Queensland. This paper is going to elaborate on identifying the need for Innovation for
the company through identifying the threats from the industry analysis (Porter’s five forces) and
PESTLE framework. It would further identify and evaluate the current growth strategy of the
company through evaluating its portfolio of options making use of the BCG Matrix, McKinsey
GE frameworks and Horizons of growth. The paper shall also shed light on the innovation
opportunity that the company is currently pursuing by using the MACS framework.
Discussion
1. Company Overview
The Bank of Queensland was established in the year 1982 and is based in Australia
(Shellberg et al. 2016). It has been operating within the Australian region and is headquartered in
Brisbane, Queensland. Bank of Queensland offers a variety of services including a wide range of
financial and banking support to all its clients and customers along with more than three hundred
branches throughout the Australian region (Bebawi, Campbell and Mayer 2015). It has a
business strategic plan that is generally based on building up of strong relationship with all its
customers.

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2. Need for Innovation
2.1. Industry Analysis (Porter’s Five Forces)
Threats of New Entrants  Intense
 Competition among the international
banks
 The portfolios such as the medical
finance are very limited and are
affected by the new entrants
 As the bank of Queensland is a much
older firm, therefore it has very
medium pressure of new entrants
Threats of Substitutes  High
 It is high because of the similarity of
services and products that are offered
within the banking sector
 However, it also has special service
like medical financing which is rare
and there are very few firms who
offers it
Buyer Power  Low
 The bank already works for the
satisfactory products and services for
the customers
 It has high customer expectations and
is meeting all their expectations as this
is an evidence from the customer
rating
 It has the strategy to build strong
relationship with the customers and
this is making it difficult to gain
pressure from the customers
particularly on the issue of price
(Thompson, Fryirs and Croke 2016)
Supplier Power  Medium
 Suppliers needs fair price for the
products and services
 Bank of Queensland has many
suppliers inclusive of the general
domestic one and technology firms
with very medium bargaining power in

5BANK OF QUEENSLAND
comparison to the other sector
 The supplier power has very low
influence on the banks, particularly on
medical slide where very few suppliers
are needed.
Industry Rivalry  Low
 The banking sector is based on the
concept of professionalism and is
guided by certain code of practices
 Bank of Queensland has ventures into
the another niche without players and
very low rivalry
2.2. PESTLE Analysis
Political  The legal framework of Australia,
particularly in Queensland enables
licensing and contract business of the
business hence resulting in high
performance
 The anti-trust law that is enacted is
important for banking purpose within
the country (Song 2012).
 Regulation such as Paris agreement
(2016)
 Liability laws
Economic  Australia has good exchange rate
which is coupled with the Australian
currency and it is a critical factor in
banking industry
 The economic growth rate determines
the growth of business
 The rate Inflation in the country
currently stands at 1.80%.
 Stable interest rate
Social  population size
 Life style of citizen in Australian
offers opportunity for bank to grow
since many people currently prefer
being attached to banks.
 Desire of most people to own facilities
and houses.

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Technological  medical finance
 investing in banking technologies
 offering online banking services
 Employing technological policies
within the operations as because
Australia is in verge of becoming
technologically advanced nation
(Teich 2008).
Analysis of Threats
The threats present for the bank of Queensland are that of the fact that there is very
intense competition from the international banks in the market and along with this, there is very
little increase in demand for the banking services in the country. The competitors of the bank i.e.,
the Commonwealth Bank of Australia, Bank of Western Australia Ltd., Westpac Banking
Corporation, National Australia Bank Limited etc., are also offering similar products to the
customers like that of Bank of Queensland (Cummings and Durrani 2016). Although, the service
like that of medical finance that the bank is offering is unique indeed and it also attracting many
customers towards the firm, still there are no regular supply of innovative products in the market.
Over the years BOQ has developed numerous products but all of them are often considered to be
response to the development by the other players. Furthermore, the supply of new products is not
at all regular hence this is resulting in high and low swings in the number of sales over time. The
new regulations like that of Paris agreement of 2016 could be considered to be a threat to many
of the existing products of the bank (Besley 2015). The growing strengths of the domestic
distributors could also be a threat for the market as because of the fact that competition is paying
higher margins to local distributors. Furthermore, the liability laws in different nation are

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different and the BOQ might get exposed to the various liability claims that are given change in
the policies of those markets.
3. Evaluating the current growth strategy
Three of the current growth strategy that is used by the banks includes provision of the
quality and the genuine products, customer relationship strategy and the new and innovative
niche. The current strategy that the Bank of Queensland is using is that of making strong and
long term relationship with all its customers with an intention to retain all the customers and to
be loved by them (Bolton et al. 2014). Secondly, it is also focusing on coming up with new un-
ventured areas with the company explores for the growth and development. Furthermore, the
strategy is also built on the genuine, truthful and quality offering to the customers to make them
satisfied. BOQ works to prove that it has the potential to be loved by all its customers in
Australia. Also, the new business niche of the firm which is characterized by the new venture
areas is yet another crucial business strategy which serves to venture into the areas that are with
limited competition in the market. Moreover, offering top quality services and products to the
customers is also another area which is driving the growth of BOQ as because the bank aims to
offer quality products and services thereby has become a bank that is with high customer rating
in the entire region.

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3.1 The three horizons of Growth
Focus
Output
Sales
Executing to
defend, extend
and to increase
the profitability of
existing
businesses.
Resourcing initiatives to
build new businesses
Uncovering the
options for future
opportunities and
placing bets on
selected options
Annual planning
and forecasting
Business building
strategies- investment
budget, detailed
business plans for the
new ventures Decisions to explore-
project milestones
Horizon 1
Horizon 2
Horizon 3
Mature Business Rapidly Growing Business Emerging Business

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4. Evaluating its portfolio of options using:
4.1 BCG matrix
The BCG (Boston Consulting Group) matrix is a very easy handling tool that is used for
evaluating the position of a company in regards of its range of products (Torquati et al. 2018). It
facilitates the companies to think about their services and products and make certain decisions
regarding which products and services should they keep, which one to let go and which are to be
invested on in future. The BCG matrix also provides a very useful method of screening the
opportunities that open for the companies and help them to think about where they could best
allocate the resources for maximizing the profits in future. In the BCG matrix the products and
services are classified into the following:
 Star- The products and services under the star possess high market shares as they operate
in the growing markets. At this stage, the products and services should be generating the
positive returns for the firms.
 Question Mark or Problem Child- The products and services at this stage are with low
market share but they do operate in the high market rates of growth. The firm put a lot of
different resources in them as because of the hope that they would gradually increase the
market share of those and would generate good cash returns in the future.
 Cash Cow-Under the Cash Cow, the products and services are at the mature stage of their
life cycle (Palia, De Ryck & Mak 2014). The products and services here generate high
amount of cash for the company as the growth rate of the products are very slow. The
products in this section have high chances of getting declined in the coming years and

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therefore, proper marketing mix must be applied and employed in order to try to prevent
the decline from taking place.
 Dogs- The products under this section have very low market shares and very low market
growth rates (Rudnicki and Vagner 2014). For many companies, the option is to phase
these services and products out. However, it is also to state that some companies could do
go for the strategy of re-inventing and injecting new life into those products.
Star
Online Banking
Medical Financing
Home loan
Investment products
Question Mark
Debit Cards
Car loans
Personal Loan
Cash Cow
Term Deposits
Savings and Transaction accounts
Investments
Credit Cards
Home Insurance
Superannuation
Dog
Travel Insurance
Landlord insurance
4.2 GE-McKinsey Portfolio matrix
It is a strategic tool that is used for the portfolio analysis. It is same like that of the BCG
matrix. The GR-McKinsey is an extension of BCG matrix (Brauer et al. 2017). It compares
different businesses on the Market Attractiveness and Business Strength variables along with the
size of the bubbles that represent the market sixe that is used in the BCG matrix. It has v

11BANK OF QUEENSLAND
Busi
ness
attra
ctiv
enes
s
Hig
h
Med
ium
Low
 Search for
leadership
 Push growth
 Maximize
investment
 Heavy
investments
 Search for
growing
segments
 Keep other
positions
 Balance
investments to
defend the share
 Defend global
market share
 Search for the cash
flow
 Challenge
weaknesses
 Reinforce
strength
 Segmentation to
find leadership
 Specialization
 Focus on the
growing
segments
 Selective
investments
 Minimum
investments
 Think of
acquisitions
 Specialization
 Search for the
market Niche
 Think of
divestments
 Specialization
 Search for the
market Niches
 Plan timing for the
divestments
 Support
management
 Attack competitors
on the Cash flow
High Medium Low
Industry Attractiveness
5. Innovation opportunity for the company
The MACS (Market Activated Corporate Strategy) framework was developed in the late
eighties but it was not developed at once. It represents much of the most recent thinking of the
McKinsey in finance and strategy. It is a framework which offers well systematic approaches for
the multi-business corporation in order to priorities all its investments among the business units.
The key insight of MACS is that the ability of a corporation for extracting the value from a
business unit that is relative to the other potential owners must determine whether or not the
company ought to hold onto the unit in the question. In the MACS matrix, the old 9 box
framework’s axes measuring the business unity ability and the industry attractiveness in order to

12BANK OF QUEENSLAND
compete have been collapsed into a single horizontal axis that represents the potential of a
business unit for creating value as stand-alone enterprise. Furthermore, the vertical axis in the
MACS framework represents the ability of a parent company, relative to the other present
potential owners for extracting the value from a business unit and it is this second measure which
makes the framework unique. There are several opportunities present for the bank in order to
grow further. One among them is that the bank can get engaged in global tie-ups with other
banks and associations who would help it to develop as an international firm (Petri 2018).
References:
Bebawi, F.F., Campbell, S.D. and Mayer, R.J., 2015. Seed bank longevity and age to
reproductive maturity of Calotropis procera (Aiton) WT Aiton in the dry tropics of northern
Queensland. The Rangeland Journal, 37(3), pp.239-247.
Besley, T., 2015. Law, regulation, and the business climate: The nature and influence of the
World Bank Doing Business project. Journal of Economic Perspectives, 29(3), pp.99-120.
Bräuer, J., Saft, M., Plösch, R. and Körner, C., 2017, October. Improving object-oriented design
quality: a portfolio-and measurement-based approach. In Proceedings of the 27th International

13BANK OF QUEENSLAND
Workshop on Software Measurement and 12th International Conference on Software Process
and Product Measurement (pp. 244-254). ACM.
Cummings, J.R. and Durrani, K.J., 2016. Effect of the Basel Accord capital requirements on the
loan-loss provisioning practices of Australian banks. Journal of Banking & Finance, 67, pp.23-
36.
N. Bolton, R., Gustafsson, A., McColl-Kennedy, J., J. Sirianni, N. and K. Tse, D., 2014. Small
details that make big differences: a radical approach to consumption experience as a firm's
differentiating strategy. Journal of Service Management, 25(2), pp.253-274.
Palia, A.P., De Ryck, J. and Mak, W.K., 2014. Interactive Online Strategic Market Planning
With the Web-Based Boston Consulting Group (BCG) Matrix Graphics Package. Developments
in Business Simulation and Experiential Learning, 29.
Petri, P.A., 2018. The interdependence of trade and investment in the Pacific. In Corporate links
and foreign direct investment in Asia and the Pacific (pp. 29-55).
Porter, M.E. and Kramer, M.R., 2019. Creating shared value. In Managing Sustainable
Business (pp. 327-350). Springer, Dordrecht.
Rudnicki, W. and Vagner, I., 2014. Methods of strategic analysis and proposal method of
measuring productivity of a company. Zeszyty Naukowe Małopolskiej Wyższej Szkoły
Ekonomicznej w Tarnowie, (2 (25)), pp.175-184.
Shellberg, J.G., Spencer, J., Brooks, A.P. and Pietsch, T.J., 2016. Degradation of the Mitchell
River fluvial megafan by alluvial gully erosion increased by post-European land use change,
Queensland, Australia. Geomorphology, 266, pp.105-120.

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Song, W. (2012) The Report of Expansion Bank of Queensland Business in Thailand Analysis.
Available at https://www.bartleby.com/essay/The-Report-of-Expansion-Bank-of-Queensland-
F3UFGNKVC
Thompson, C.J., Fryirs, K. and Croke, J., 2016. The disconnected sediment conveyor belt:
patterns of longitudinal and lateral erosion and deposition during a catastrophic flood in the
Lockyer Valley, South East Queensland, Australia. River Research and Applications, 32(4),
pp.540-551.
Torquati, B., Scarpa, R., Petrosillo, I., Ligonzo, M.G. and Paffarini, C., 2018. How Can
Consumer Science Help Firms Transform Their Dog (BCG Matrix) Products Into Profitable
Products?. In Case Studies in the Traditional Food Sector (pp. 255-279).