Commonwealth Bank of Australia: Business Case Analysis, MGMT 20144

This report presents a business case analysis of the Commonwealth Bank of Australia (CBA), examining its organizational structure, corporate practices, and the influence of environmental factors. The analysis utilizes the PESTLE framework to assess political, economic, social, technological, legal, and environmental factors impacting CBA. It also identifies key risks, including capital requirements, economic slowdown, and competition from tech giants. The report delves into CBA's corporate practices, highlighting its commitment to diversity, innovation, and employee engagement through high-performance work practices. Furthermore, it explores the functions of CBA across operations, finance, human resources, and research and development. The conclusion emphasizes CBA's strategic objectives, future prospects, and recommendations for international expansion. The report draws on various sources to support its findings and provides a comprehensive overview of CBA's business operations and strategic management.

Running Head: MANAGEMENT 0
BUSINESS CASE ANALYSIS

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Table of Contents
Introduction................................................................................................................................2
About Common Bank of Australia............................................................................................2
Organisational and governance structures.................................................................................2
The impact of environmental forces on organisations...............................................................3
Risks confronting the firm.........................................................................................................5
Organisational and business practices........................................................................................6
The functions of a diverse range of firms..................................................................................6
Conclusion..................................................................................................................................8
References..................................................................................................................................9

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Introduction
This essay outlines business case analysis of Commonwealth Bank of Australia
(CBA) i.e. one of the most valuable brands of Australia. This report aims to illuminate user
about the emergence of a business organisation with its organisational functions, corporate
practices and the impact of environmental factors on the business presenting both risks and
opportunities. The scope of this essay is to ascertain CBA organisation structure, corporate
practices and functions together with assessing various significant environmental factors
using PESTLE tool and other management framework. At the end, a short summary is also
being outlined encompassing the whole essay significant points.
About Common Bank of Australia
One of the prominent and leading Australian bank i.e. The Commonwealth Bank of
Australia (CBA) incorporated in 1911. As of 2018, CBA is the third biggest listed enterprise
in the Australian Stock Exchange and also known from the Big Four Australian banks, beside
ANZ, Westpac and NAB. CBA has its businesses across Asia, Europe, New Zealand and
North America making its one of the great multinational bank of Australia and operates
through six business segments with nearly 45, 753 employees. In 2019, CBA total assets
were identified to be nearly 976.5 billion Australian dollars (forbes.com, 2019).
Organisational and governance structures
Commonwealth Bank of Australia has a corporate structure of a company who consists of
different members and shareholders who own the company and various directors such as
Matt Comyn, Shirish Apte, Mary Padbury, Rob Whitfield and so forth (commbank.com.au,
2020). In relation with corporate governance, it refers to the interaction amid various

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participants such as shareholders, company executives and board of directors in shaping
business performances and the way it is continuing towards. The governance structure of the
Commonwealth Bank of Australia can be seen in figure 1 where the board is responsible for
setting up the strategic goals and risk appetite for the bank and accordingly direct the people
behaviour. A CEO has been appointed by the board and they also assess and manage the
performance and bank governance framework. Certain power has been reserved by the board
and it further delegates to the board committees to undertake particular responsibilities
(commbank.com.au, 2019). The board also consults with the CEO and this make to delegate
certain power to Group executives and directors.
The impact of environmental forces on enterprise
The Commonwealth Bank of Australia decision making and performance is
influenced by its external business environment. It can be effectively assessed with using
PESTLE tool and framework that helps the management to identify key driving forces in the
external business environment of a firm.
Figure 1- (Source: commbank.com.au, 2019)

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1. Political Factors – Business performance and growth directly influenced by the
change in government policies or practices (Klettner, Clarke & Boersma, 2014). In
case of CBA, the bank has gained various opportunities when Australia decided to
join China-led Asian Infrastructure Investment Bank in 2015 (dw.com, 2015). It has
brought out many opportunities for CABA like opening new branches in China and
other Asian countries.
2. Economic Factors – Australian companies are raising their economies and the
markets are shifting from the investments that are led by the mining to the various
non-mining areas. It will impact the banking sectors as well as CAB and they will also
have to adapt the changes and allocate the resources accordingly.
3. Social and Cultural Factors – There is an increasingly ageing population in
Australia with older Australians a increasing proportion of the entire population
(Sotiriadou & Wicker, 2014). In 2017, 15 per cent of Australians (3.8 million) were
aged 65 and over; this ratio is likely to rise gradually over the approaching decades
(aihw.gov.au, 2018). The economic growth, in the long run, will definitely go down
for the Commonwealth Bank as due to decline in working population and presenting a
lot of pressure in the Australian economy to uphold the standard of living and growth.
EconomicPolitical
Social Technological
LegalEnvironmental

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4. Technological Factors – Australia financial system will continue to shape with
technological driven innovations as there is also a greater dependency on digital
technology and CAB in this aspect has carried out a range of technological
innovations in terms of smart phone of applications and consumer analytics for retail
such as investment in blockchain and quantum computing, innovation lab in Sydney
and so forth.
5. Environmental Factors - It impends with the information on the country
performance on environmental practices and marks and in this place, CAB in 2017
confronts legal action over failure to reveal climate change risk in report stances to its
economic position (Younger, 2017). Hence, it can impact on both company goodwill
and group performance.
6. Legal Factors – It is necessary for all banks including CAB to work under countries
legal framework so that future business sustainability can be raised in a positive
direction. For instance, CAB in 2018 has to pay $700m to settle money laundering
lawsuit concerning to breaches of anti-money laundering and counter-terrorism
financing laws (Hutchens, 2018).
Risks factors for the firm
Bloom (2014) defined risks as a future uncertainty about deviation from likely
earnings or anticipated outcome while assessing the uncertainty that an investor is prepared to
take to realize a benefit from an investment. In relation to Commonwealth Bank of Australia,
the three major risks include higher capital requisite by APRA, insubstantial business
environment and slowdown in China and tech giants. Considering the higher capital
requirement by APRA, The Australian Prudential Regulation Authority (APRA) has applied
additional capital requirement in 2019 to reflect higher operational risks recognised in their
risk governance self-assessments. To the CBA, APRA applied a $1 billion dollar capital add-
on and this will create risks for the bank profits to being squeezed by higher compliance costs
and tougher competition (ft.com, 2019).
Slowdown in China is another risk for Commonwealth Bank of Australia and from an
external perspective, the senior economists at CBA stated that biggest threat comes from a
collapse in commodity prices. For instance, Australian continue to heavily depend on
commodities for its resource income and a big portion of their exports go to China and
therefore, the greatest risks to commodity prices is a slowdown in China that would lead to a

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lower investment development or progress. Ultimately, the third risks concerns with tech
giants where in recent times, banks offering essential services are being threatened by non-
bank entities such as introduction of Apple Pay (de Reuver et al, 2015). It could possibly
knock the CBA off their perch in the years to come until robust strategy not has been
developed.
Organisational and corporate practices
Commonwealth business practice is transparent, balanced and sustainable and also
remains concentrated on making long term value for its consumers, shareholders and persons.
For instance, the company shows a positive commitment to diversity and inclusion so as to
foster a culture with set targets. For instance, CBA aims to have 40% women representation
in executive manager positions and above by 2020 (commbank.com.au, 2019). The company
also focuses on innovation and gaining first mover advantage in the industry as it helps the
brand to gain higher brand awareness all over world while improving internal business
performance. For instance, Commonwealth Bank and World Bank collaboratively carry out
Project Bond-i in 2018. It was a blockchain functioned new debt instrument and the domain
first bond to be developed, allotted, transferred and administered through its lifecycle using
blockchain technology.
In addition, CBA also focusing on employee engagement through their
whistleblowing policies and offering employee with best tools, techniques and spaces for a
mindset of innovation. For example, CBA in 2019 develops a new technology and innovation
hub in Sydney that offers employee the ongoing freedom to work in a place and enables them
to perform at the best. This will help in a better decision making towards companies strategic
goals and mission and therefore, develops a unique trust with business lines and customers
(Gill, 2015). According to research by Gallup, highly engaged teams are 21 per cent more
productive and have 28 per cent less internal theft in comparison with those with low
engagement (Sanders, 2020).
The functions of a diverse range of firms
The decision making activities and strategies of every company depend upon their
various functional areas and divisions and in case of CBA, some of the significant business
functions include operations, finance, human resource, marketing and research and

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development. The operational functions of CBA are related to its various banking
transactions and activities such as bill payment services, online banking, clearing of cheques,
lending’s of funds and so on. The finance function of CBA simplifies its role as a financial
intermediary where the deposits are accepted and loans are issued. The company is offering
financial services in Australia, New Zealand, Europe and Asia.
In relation with human resource functions, CBA ensures to draw the interest of skilled
people, offering them a suitable business environment helping in their career growth and
prospects, ensuring optimum performance of human resource and so on. For instance, CBA
hires 120 new business bankers last year so as to gain a greater market share in the lucrative
small business market. Lastly, research and development function is undertaken by CBA
where the company keep improving its systems and services while coming up with new
innovate and customer friendly products. According to Barbaschow (2019), Commonwealth
Bank to expend over AU$5b on tech in the succeeding five years. Hence, these all are the
major functional areas of CBA that helps the company to reach nearer towards its vision.

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Summary
In the limelight of above discussion, it is clearly visible that how a company achieve
its strategic objectives through the various business practices, functions, governance
structure, risks management and with assessing the external business environment.
Commonwealth Bank of Australia is one of the fastest growing innovative banks in Australia
with having great transparency across all its operations and taking right strategic decisions at
the right time. The future of CBA is clearly visible on a right track due to company holistic
plans and strategies among the Big Four Australian banks. It can be recommended to the
management and company that they should plan international expansion into other countries
as it will offer them a competitive advantage together with achieving economy of scale.

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Reference List
aihw.gov.au. (2018). Older Australia at a glance. Retrieved from
https://www.aihw.gov.au/reports/older-people/older-australia-at-a-glance/contents/
demographics-of-older-australians/australia-s-changing-age-and-gender-profile
Barbaschow, A. (2019). Commonwealth Bank to spend over AU$5b on tech in the next five
years. Retrieved from https://www.zdnet.com/article/commonwealth-bank-to-spend-
over-au5b-on-tech-in-the-next-five-years/
Bloom, N. (2014). Fluctuations in uncertainty. Journal of Economic Perspectives, 28(2), 153-
76. DOI: 10.1257/jep.28.2.153
commbank.com.au. (2019). Corporate governance. Retrieved from
https://www.commbank.com.au/content/dam/commbank-assets/about-us/2019-08/
CBA-2019-Annual-Report-Corporate-governance.pdf
commbank.com.au. (2020). Our board. Retrieved from
https://www.commbank.com.au/about-us/our-company.html
de Reuver, M., Verschuur, E., Nikayin, F., Cerpa, N., & Bouwman, H. (2015). Collective
action for mobile payment platforms: A case study on collaboration issues between
banks and telecom operators. Electronic Commerce Research and Applications, 14(5),
331-344. DOI: https://doi.org/10.1016/j.elerap.2014.08.004
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from https://www.dw.com/en/a-look-at-the-china-led-asian-infrastructure-investment-
bank/a-18541209
forbes.com. (2019). Commonwealth Bank. Retrieved from
https://www.forbes.com/companies/commonwealth-bank/#2d5bdd715d02
ft.com. (2019). Australia’s big banks told to boost capital on governance risks. Retrieved
from https://www.ft.com/content/0d44a9fe-a377-11e9-974c-ad1c6ab5efd1
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value to CSR: An integrated literature review. Public Relations Review, 41(5), 662-
674. DOI: https://doi.org/10.1016/j.pubrev.2014.02.012

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Hutchens, G. (2018). Commonwealth Bank agrees to pay $700m to settle money laundering
lawsuit. Retrieved from
https://www.theguardian.com/news/2018/jun/04/commonwealth-bank-agrees-to-pay-
700m-to-settle-money-laundering-lawsuit
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https://doi.org/10.1007/s10551-013-1750-y
Sanders, G. (2020). Employee Productivity Statistics: Every Stat You Need To Know.
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Sotiriadou, P., & Wicker, P. (2014). Examining the participation patterns of an ageing
population with disabilities in Australia. Sport Management Review, 17(1), 35-48.
DOI: https://doi.org/10.1016/j.smr.2013.04.004
Younger, E. (2017). Commonwealth Bank faces legal action over failure to disclose climate
change risk in report. Retrieved from
https://www.abc.net.au/news/2017-08-08/commonwealth-bank-legal-action-over-
climate-change-disclosure/8786046