Business Analysis of Royal Bank of Canada: Strategies and SWOT

This report provides a detailed analysis of the Royal Bank of Canada (RBC), examining its organizational structure, customer base, mission, core values, and vision. It delves into RBC's corporate and business-level strategies, highlighting its growth-oriented corporate strategy and cost leadership business strategy. The report includes a thorough SWOT analysis, identifying RBC's strengths (low-cost structure, strong financial position), weaknesses (limited R&D, high inventory costs), opportunities (automation, e-commerce integration), and threats (currency fluctuations, competitor technology). The analysis also references key academic sources and online resources, offering a comprehensive overview of RBC's business operations and strategic positioning within the financial services sector. The report aims to provide insights into RBC's strategic approach and its competitive landscape.

Research and analysis
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Table of Contents
Summary of organisation.................................................................................................................3
Customer base..............................................................................................................................3
Mission and core values...............................................................................................................3
Vision...........................................................................................................................................4
Corporate level strategies............................................................................................................4
Business level strategies..............................................................................................................4
SWOT..........................................................................................................................................5
REFERENCES................................................................................................................................8
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Summary of organisation
Royal Bank of Canada is a Canadian company founded by Halifax and Nova Scotia in 1864.
They operate in financial service sector and is largest bank of Canada. There are over 16 million
customers of bank and 80,000 employees working in it. The headquarter is located in Toronto,
Ontario. Company offers variety of financial services such as retail, corporate banking, credit
cards, insurance, wealth management, etc. (Appel, 2015). Moreover, there are various
subsidiaries of organisation that are city national bank, royal bank of T&T, etc. In 2011 Royal
Bank of Canada was ranked number 50 in 2013 in Forbes. It operates in 40 other countries and
generated revenue of $673.2 billion in 2014.
In 1864, Halifax and Nova Scotia founded merchandise bank. In year 1869, bank expanded
into maritime provinces. Further, in 1895 it merged into new found land. So, there was high
growth of organisation. In 1901 merchant bank name was changed to Royal Bank of Canada.
Customer base
The RBC customers are mainly people of Canada. It also serves their services to small and
large organisation. Thus, the target market are people belonging to group, gender, occupation,
etc. However, in many countries customer base depends on economic condition. There bank
segment target market on basis of income level. They provide services to high income level
people. Moreover, age factor is also included in segregating target group. Furthermore, on basis
of services, customer base is set. For loans customer above age of 18 are eligible for it.
Mission and core values
Its mission statement is endeavours to be first choice for consumers, businesses,
institutions and government (Maiorano, Mook & Quarter, 2017). The main purpose is to
provide best financial services to stakeholders. Also, corporate culture is to hire experienced
financial advisors and creating an environment in which they operate is their responsibility.
Royal Bank of Canada mission is to become only number one choice for customers by offering
best financial services.
There are basically five core values of Royal Bank of Canada. They are defined below :-
 Excellence in services to clients.
 Working in team to succeed
 Diversity for growth and innovation
 Trust through integrity in whatever we do
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 Personal responsibility for high performance
Core values reflects that bank wants to contribute towards economic growth. There want to
gain customer trust by honesty.
Vision
Its vision statement is “Always earning the right to be our clients first choice.” It clearly
states that in future company wants to be customer first choice. It means they want to become
market leader in finance industry by offering services. Moreover, bank want to earn profit and
develop a large customer base (Pratiwi & et.al., 2017).
Corporate level strategies
The bank corporate level strategy is growth one as they like to generate more profits by
selling services. In growth they follow horizontal growth strategy where business is expanded
into new countries and markets. Similarly, Royal Bank of Canada is operating in many countries.
They identify and analyse new markets and then enter in it. The services offered are same but
market is different. This strategy is effective because it allows to expand business operations. In
it there is no new product or service offered. So, it is less risky because offering new product in
other market can be failure. Therefore, focus is only on expansion in other countries. Alongside,
business can easily increase customer base and operate worldwide. However, emphasis is on
growth and not on new product. As there is stiff finance industry, organisations are trying to
expand into other countries. And this strategy has resulted in their growth and development.
Business level strategies
It can be analysed that Royal Bank of Canada uses cost leadership strategy. The provide
services at lower cost in the industry. With this they are able to gain competitive advantage in
market. This can be observed that bank is Canada number one as they offer services at low cost.
Similarly, in many other countries as well organisation has attracted large number of people.
Usually, this strategy is not effective in financial sector because it does not give higher return.
Moreover, if there is downfall in interest rate then cost leadership leads to rise in capital
expenditure (Richards, 2019). The implementation of this strategy may not be beneficial for
organisation. Also, on basis of economic condition of market, cost is defined.
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SWOT
This model enables in analysing internal environment of company. It identifies strength
and weakness in relation to opportunity and threats (SWOT analysis, 2015). The SWOT of Royal
Bank of Canada is described below :-
Strength
 Its low cost structure helps in offering services at low cost and creating a large customer
base.
 They are having a strong relationship with dealers and suppliers. It supports in
availability of services easily and also promoting it.
 The bank is having a strong financial position with huge profits. Also, they are having
enough reserves for capital expenditure in future. In addition, the asset base is large that
offers better solvency (Suy, Choun & Chhay, 2018).
 Bank have generated a high return on capital from various types of projects from past.
 The automation in offering services is reduced
 Skilled and experience employees provide services to customers in effective way.
furthermore, diversified staff enables in creating a positive organisational culture.
 The product portfolio of bank offers variety of services to different customers. Also, it
offers unique services that are not provided by competitors.
 Strong trademark and copyright of property restricts rivals to copy it.
 Strong partnership with other banks and stakeholders allows in ease in offering services.
Weakness
 There is less expenditure on R&D which has not given significant competitive advantage
in industry. So, they are not as advance as their rivals.
 The high day sales inventory costs are high for Royal Bank of Canada as compared to
industry cost. So, it adds to their unnecessary cost (Weber, 2015).
 The rented property of bank is more than its owned one. So, they have to pay huge
amount on it which adds to their cost.
 It is having a low cost ratio which reflect that only short term liability. Hence, due to
liquidity problem, its brand image is negative.
 Another weakness is cash flow problems due to which they are not able to attract more
people.
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 High employee turnover has created negative image of bank in industry. The company
turnover rate is high than its competitors.
 In legal department bank is not having experienced staff.
 Employees are not appraised properly on basis of their performance. So, their morale is
low that leads to inconsistency in operations and low productivity.
Opportunities
 Bank can make its process automated which will improve their operational efficiency.
Also, they can provide services online (Pratiwi & et.al., 2017).
 Company can integrate with E commerce businesses. They can start offering their
services to them in stores. In this way they will grow and develop.
 Royal Bank of Canada can enter in those markets that are developing. It will enable in
increasing customer base and offering loan at low rates.
 Moreover, they can target those nations where interest rate is low. Thus, bank can
provide loans to customer at cheap rates and generate profits.
 The use of social media can help in attracting in effective promotion and attracting new
customers. Bank can also use tools like data analytics to improve service quality and
fasten process.
 There are many new niche markets that are growing at high rate. Therefore, bank can
operate in those market and provide financial services.
Threats
 As bank operates in various countries which may have currency fluctuations. Hence, it
can highly impact on their interest rate.
 The use of advance technology by competitor can become a threat for organisation. They
may have to face stiff competition in order to survive in market for long term.
 The fluctuation in international economic condition due to trade or tariff war may impact
on bank operations (Richards, 2019).
 Change in customer taste and needs may also force them to change their interest rate. In
addition to it, substitute product availability is increasing.
 There have been numerous players that have entered the market and are gaining market
share by gaining existing companies’ market share. This is a threat to Royal Bank of
Canada as it can lose its customers to these new entrants.
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 The exchange rate keeps fluctuating and this affects Royal Bank of Canada that has sales
internationally, while its suppliers are local.
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REFERENCES
Books and journals
Appel, S. (2015). Priority in Security Interests: Implications for Secured Creditors-Montreal
Trust Company of Canada in Its Capacity as Trustee of CFI Trust and CFI Leasing
Limited and Royal Bank of Canada. Banking & Finance Law Review. 30(3). 619.
Maiorano, J., Mook, L., & Quarter, J. (2017). Is There a Credit Union Difference? Comparing
Canadian Credit Union and Bank Branch Locations. Canadian journal of nonprofit and
social economy research. 7(2).
Pratiwi, A. & et.al., (2017). Formulating Strategy Through QSPM Based on SWOT Framework:
A Case Study Spin-Off Company in Malaysia. Advanced Science Letters. 23(9). 8646-
8651.
Richards, K. (2019). Revisiting the fraud exception: a critique of United City Merchants v Royal
Bank of Canada 40 years on. Legal Studies, 1-20.
Suy, R., Choun, C., & Chhay, L. (2018). Review of Agriculture and Rural Development to
Poverty Reduction in Cambodia: SWOT Analysis. Asian Themes in Social Sciences
Research, 1(1), 1-9.
Weber, O. (2015). Responsible investment in Canada. In The Routledge Handbook of
Responsible Investment (pp. 94-104). Routledge.
Online
SWOT analysis, 2015. [online] Available through : < https://www.essay48.com/term-paper/3269-
Royal-Bank-of-Canada-Swot-Analysis >
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