Management of Strategic Change at Bank of Cyprus Report

This report provides a comprehensive analysis of strategic change management, focusing on the Bank of Cyprus. It begins with an overview of the company, its external environment assessed through PEST and Porter's Five Forces analyses, and its internal environment, including value chain, organizational structure, core competencies, mission, vision, and a SWOT analysis. The report then employs the Strategy Diamond framework to describe the company's strategy, focusing on arenas, competitive strategy, and vehicles. The second part of the report delves into a specific strategic change that occurred in recent years, examining the initial organizational response, the cultural web, and the identification of blockages and facilitators using force field analysis. The analysis applies Kotter's 8-step framework to the change management process, evaluates the change program, and suggests potential improvements. The report concludes with references supporting the analysis, offering a complete understanding of strategic change implementation within the context of the Bank of Cyprus and its specific challenges.

Running head: MANAGEMENT
Managing Strategic Change
Name of the Student:
Name of the University:
Author Note:

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Table of Contents
Part 1: Company, Environment and Strategy..................................................................................2
1. Overview of the Company...........................................................................................................2
2. Trends in External Environment:.................................................................................................2
3. The Internal Environment............................................................................................................4
4. Mission and Vision of the Company...........................................................................................5
6. Strategy Diamond Framework:....................................................................................................6
Part 2: The Management of a Specific Strategic Change................................................................7
1. Description of Specific Situation Involving Strategic Change that happened in Past Few Years
.........................................................................................................................................................7
2. Initial Response by Organizations...............................................................................................7
3. Description of Cultural Web of the Company and the Key Elements........................................7
4. Identification of Blockages and Facilitators of Change through Force Field Analysis...............7
5. Kotter’s 8-step Framework..........................................................................................................8
6. Evaluation of Change Program..................................................................................................10
7. Things that could have been done differently...........................................................................10
References:....................................................................................................................................11

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Part 1: Company, Environment and Strategy
1. Overview of the Company
The report here focuses on the Bank of Cyprus. It is a financial service firm that was
established in the year 1899 with its headquarters in Strovolos. The bank presently has overall
108 branches and most of them operate from Cyprus1. However, it has representative offices in
Greece, Russia, Romania, China and Ukraine. It is one of the biggest banks in Cyprus in terms of
the market penetration. Records portray that 83 percent of the Cypriots have active bank
accounts in the bank that represented 60 percent share in the entire corporate account and 40
percent of the share in overall sector of banking2. The bank is committed towards social
prosperity and progress with corporate culture remaining aligned towards staffs, customers,
shareholders and the stakeholders.
2. Trends in External Environment:
a. PEST Analysis
Political Factors: The political stability and laws of the country works towards providing a
positive boost to the bank. While trade barriers protect the bank but the higher taxation level
would prevent the company in maximizing its profits.
1 bankofcyprus.com, in https://www.bankofcyprus.com/en-GB/who-we-are/boc-at-a-glance/our-banks-new-culture-
of-values/,, 2019.
2 bankofcyprus.com, in https://www.bankofcyprus.com/en-GB/our-responsibilities/our-commitment/, , 2019.

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Economic Factors: The GDP growth rate of the country will have an impact on the growth
of the bank. The stability of currency and the exchange rate is also vital provided the bank
engages in international trade.
Social Factors: Class distribution represents a vital factor for the promotion of product
of the Bank since it is unable to carry out promotion when majority belongs to lower class.
Besides, differences in the educational backgrounds amongst marketers and target market make
it difficult for the bank to relate.
Technological Factors: The bank needs to monitor the popularity level of a new
technology by identifying its growth and level of disruption of the competitor revenue. This
would help it in understanding the urgency in responding to such innovation.
b. Porter’s Five Forces:
Threat of the Newer Entrants: The new entrants leads to innovation and newer means
of doing things by putting pressure on the Bank of Cyprus to lower the pricing strategy, reduce
the cost and provide newer value propositions to customers
Bargaining Power of the Suppliers: The dominant suppliers decrease the margins that
Bank of Cyprus holds in market. These suppliers use their power of negotiation to extract higher
price from banks.
Bargaining Power of the Buyers: Buyers have been quite demanding since they demand
best offering at minimum price. This creates pressure on the profitability of the bank in long run.

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Threat of the Substitute Products or Services: When there is a product or service that
is able to meet the similar needs of the customers but in different manner then the profitability of
industry suffers.
Rivalry amongst Existing Competitors: Industry rivalry amongst existing players will
lower the prices and decrease the profitability of industry. Bank of Cyprus operates within
competitive industry that takes toll on its long- term profitability.
c. Strategic Groups in the Industry:
The strategic group of the Bank of Cyprus includes Lakeland Bank, Rizal Commercial
Banking Corporation (RCBC), Hellenic Bank, HCC, SBC and Metrobank. They all focus
towards similar strategic dimensions through using similar strategy.
3. The Internal Environment
a. Value Chain: This involves introduction of newer criteria for a transparent and
smooth selection of the suppliers3. It also involves improvement of supplier assessment and
selection procedure in each area of cooperation along with the introduction of larger bidders by
10 percent.
b. Organizational Structure:
3 bankofcyprus.com, in https://www.bankofcyprus.com/globalassets/csr/reports/boc-responsibility-report-eng.pdf, ,
2019.

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Figure 1: Diagrammatic Representation of Organizational Structure
Source: 4
c. Core Competencies: Lies in the professional buy for letting the property market that
involves 75 percent of lending portfolio with average Loan to Value (LTV) ratio of close to 55
percent5.
4 bankofcyprus.com, in https://www.bankofcyprus.com/en-GB/who-we-are/our-leadership/the-groups-
organisational-structure/, , 2019.
5 bankofcyprus.com, in https://bankofcyprus.com/globalassets/investor-relations/presentations/english/20160928-
investor-presentation_-final-final.pdf, , 2019.

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4. Mission and Vision of the Company
The bank aims at becoming the first choice in growth, management and protection of
wealth along with building necessary customer satisfaction through quality service and long term
relationship depending on the solid foundations6.
5. SWOT Analysis
Strength
1. Product Innovation
2.Have Stronger Cash Flow
3. Better returns on the capital expenditure
Weakness
1. Requires more investment in new
technology
2. Difficulty in integrating with varied work
culture
3. The net contribution and profitability ratio
are below average
Opportunities
1. Newer trends in the consumer behavior
opens up newer markets
2. The new policy of taxation to increase
profitability
3. The development of market will result in the
increase of competitive advantage.
Threats
1. Intense level of competition provides
downward pressure on profitability
2. Presence of online channels and their
influence on changing behavior of consumers
3. Deficiency of skilled workforce.
6. Strategy Diamond Framework:
a. Arenas: The growth strategy of the company lies in the growth of the new lending particularly
focused on the SME’s, consumer and the corporate structure.
6 bankofcyprus.com.cy, in http://bankofcyprus.com.cy/en-gb/business2/private-banking_en/mission-and-vision_en/, ,
2019.

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b. Differentiate: This lies in putting across the competitive strategy of the firm lies in focusing
on the affordability and the easy accessibility of produce across globe that results in higher level
of growth and awareness thus providing competitive advantage.
c. Vehicles: The Bank of Cyprus also shows renewed level of interest in the foreign direct
investment in local markets with joint ventures, acquisitions and mergers on rise.

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Part 2: The Management of a Specific Strategic Change
1. Description of Specific Situation Involving Strategic Change that happened in Past Few
Years
Six years back, Bank of Cyprus had been at the edge of collapse since the lender had
been affected by economic crisis that casted a blow on Cyprus in the year 2013 and led to
collapse of various competitors7. The Bank of Cyprus has successfully overcome the financial
crisis through adoption of value based remediation program. This has enabled the company to
establish it as the market leader in terms of the governance and size.
2. Initial Response by Organizations
As an initial response, Bank of Cyprus seized its deposits from the savers in order to
remain afloat.
3. Description of Cultural Web of the Company and the Key Elements
The cultural foundation of the Bank has been conceived in the year 1980 as the means of
promoting Cypriot culture and history. The activities and the collections covers wider array of
the topics that included modern history, archeology, literature and arts. The cultural web of the
company strives in keeping up with times that remains accessible to wider public8.
7 worldfinance.com, in https://www.worldfinance.com/strategy/how-the-bank-of-cyprus-recovered-from-the-
economic-crisis, , 2019.
8 bankofcyprus.com, in https://www.bankofcyprus.com/en-GB/our-responsibilities/SocialResponsibility/bank-of-
cyprus-cultural-foundation/, , 2019.

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4. Identification of Blockages and Facilitators of Change through Force Field Analysis
Force-field analysis puts across a framework that represents forces that either drives a
movement towards goal (also known as facilitators) or blocks the movement towards the goal
(also known as the blockages)9.
The blockages have primarily been the economic crisis that forced the bank to seize the
deposits in order to remain afloat which broke the trust of customers. On the other hand, the
facilitators that helped the bank in overcoming the crisis lay in its effective compliance program
that has been combined with the policy framework.
5. Kotter’s 8-step Framework
Kotter’s Framework helps in recognizing a change and thereby create its acceptance and
support amongst the employees10.
a. Sense of Urgency: The sense of urgency has been the immediate seizure of the deposits
and adoption of remediation program for preventing the bank from collapse.
b. Coalition Goal: The management along with the stakeholders stressed on the newer
compliance program that ensured regaining customer trust.
c. Vision and Strategy: Bank of Cyprus considered compliance as key function of the
corporation not only valued quality of culture and reflected the organizational outlook.
9 D Swanson & A Creed, "Sharpening the focus of force field analysis", in Journal of change management, vol. 14,
2014, 28-47.
10 R Rajan & R Ganesan, "A critical analysis of John P. Kotter's change management framework", in Asian Journal
of Research in Business Economics and Management, vol. 7, 2019, 181-203

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d. Extent to which Change Vision is communicated: Customers are provided with relevant
reliability and their affairs are mostly dealt in professional manner.
e. Broad based Actions of Management: Instead of following a traditional approach, the
bank built an independent and robust compliance function that ensured efficient monitoring
measures.
f. Short term wins of the Company: Built awareness at all the institutional levels along
with providing assurances to the stakeholders about the effectiveness and robustness of the
compliance function.
g. 7s of the Company:
i. Structure: The compliance program adopted by the bank is combined with policy
framework11.
ii. Systems: The transformation of the bank is carried out through adoption of best
international practices and standards.
iii. Strategy: To attain market leading position, the company has followed a strategy of
reforming, reshaping and remediating the compliance program.
iv. Style of Management: Bank of Cypus implemented values that helped in shaping its
strategic direction in the public front.
11 bankofcyprus.com, in https://www.bankofcyprus.com/en-GB/who-we-are/corporate-governance/internal-
controls/, , 2019.

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v. Shared Values and Organizational Culture: Bank of Cyprus took a conscious decision
to transform the culture by incorporating provisions from the international framework like USA
Patriot Act that have implemented restrictions in governed jurisdictions
vi. The Staff: The organization believes in maintaining integrity and transparent amongst all
its staffs.
vii. Skills/ Competencies: Only institution governed by diverse frameworks of corporate
governance across the different European Jurisdictions. The effectiveness and robustness of
compliance function posses the skill of assuring the internal stakeholders.
6. Evaluation of Change Program
Banking represents an industry that is dependent on the trust, credibility and reputation
from its customers12. Hence, basis of remediation program lay in reestablishment of the good
reputation. The only means of achieving this has been through pursuing value based strategy that
is targeted towards cultural transformation. The Bank needed to focus more on the cultural
aspect as culture reflected the reputation of the organization
7. Things that could have been done differently
This involves:
 Rationalization of the non performing exposures with the increase in GDP
12 N Nguyen, A Leclerc & G LeBlanc, "The mediating role of customer trust on customer loyalty.", in Journal of
service science and management, vol. 60, 2019, 96.

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 Significant improvement in the corporate governance for enhancing the quality as well as
credibility of the service.
 Infusion of the business ethics at the different levels of corporate world for facilitating
cultural transformation.

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References:
bankofcyprus.com. in https://bankofcyprus.com/globalassets/investor-relations/presentations/
english/20160928-investor-presentation_-final-final.pdf, , 2019.
bankofcyprus.com. in https://www.bankofcyprus.com/en-GB/our-responsibilities/our-
commitment/, , 2019
bankofcyprus.com.
in https://www.bankofcyprus.com/en-GB/our-responsibilities/SocialResponsibility/bank-of-
cyprus-cultural-foundation/, , 2019.
bankofcyprus.com. in https://www.bankofcyprus.com/en-GB/who-we-are/boc-at-a-glance/our-
banks-new-culture-of-values/, , 2019.
bankofcyprus.com. in https://www.bankofcyprus.com/en-GB/who-we-are/our-leadership/the-
groups-organisational-structure/, , 2019
bankofcyprus.com. in https://www.bankofcyprus.com/en-GB/who-we-are/corporate-
governance/internal-controls/, , 2019.
bankofcyprus.com. in https://www.bankofcyprus.com/globalassets/csr/reports/boc-
responsibility-report-eng.pdf, , 2019.
bankofcyprus.com.cy.
in http://bankofcyprus.com.cy/en-gb/business2/private-banking_en/mission-and-vision_en/, ,
2019.

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Nguyen, N, A Leclerc, & G LeBlanc, "The mediating role of customer trust on customer
loyalty..". in Journal of service science and management, 60, 2019, 96.
Rajan, R, & R Ganesan, "A critical analysis of John P. Kotter's change management
framework.". in Asian Journal of Research in Business Economics and Management, 7, 2019,
181-203.
Swanson, D, & A Creed, "Sharpening the focus of force field analysis.". in Journal of change
management, 14, 2014, 28-47.
worldfinance.com. in https://www.worldfinance.com/strategy/how-the-bank-of-cyprus-
recovered-from-the-economic-crisis, , 2019.