HI5019: Strategic Analysis of Westpac Banking Company Report

This report presents a comprehensive strategic analysis of the Westpac Banking Group, an Australian financial institution. The analysis begins with an overview of the banking industry and a detailed PESTLE analysis, examining political, technological, social, economic, environmental, and legal factors influencing Westpac's operations. The report then delves into the industry environment using Porter's Five Forces, assessing the bargaining power of customers and suppliers, the threat of new entrants, the availability of substitutes, and the rivalry among existing players. Furthermore, the competitive environment is examined, including the company's capabilities, strategies, and the opportunities and threats it faces. The analysis also includes an intangible analysis and a review of the company's core competencies and information system solutions. The report provides valuable insights into Westpac's strategic position and the factors that shape its performance in the competitive banking landscape.

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Westpac Banking Company

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Contents
Outline........................................................................................................................................2
Industry Background..............................................................................................................2
Pestle Analysis........................................................................................................................2
Political...............................................................................................................................2
Technological......................................................................................................................2
Social..................................................................................................................................2
Economical.........................................................................................................................2
Environmental.....................................................................................................................2
Legal...................................................................................................................................3
Industry Environment.............................................................................................................3
Bargaining power of the Customers...................................................................................3
Bargaining power of the suppliers......................................................................................3
Threats of new Entrants......................................................................................................3
Availability of the substitutes.............................................................................................3
Rivalry among the existing players....................................................................................4
Competitive Environment..........................................................................................................4
Capabilities of the company...................................................................................................4
Strategies the company follows..............................................................................................4
Opportunities..........................................................................................................................4
Threats....................................................................................................................................5

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Intangible Analysis.....................................................................................................................5
Core competency Test................................................................................................................5
Information system solution and evaluation of systems............................................................5
References..................................................................................................................................7

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Outline
Westpac is as an Australian Bank which is engaged in the business of providing financials
and banking services to its customers. It is known to be one of the Australia’s big four bank
and its headquarter is situated in the Westpac, Sydney. The name of the bank is the
amalgamation of two major names which are “Western” and “Pacific”. As of March 2018,
the number of the employees associated with the Westpac bank was 32620 (Nott, 2018).
They deliver to a roundabout 14 million customers all cross the world. The team focused on
the strategic policies and recorded its current revenue at 21.642 billion with the net income of
A$ 8.012 billion. This report is a detailed analysis of the Westpac Banking Group and also
discusses about the pestle analysis. Further, the opportunities as well as threats that are
prevailing in the market are also discussed which can affect the performance of the company
(Roy, Dostaler and Fiset, 2015).
Industry Background
The Westpac belongs to the banking industry and it is involved in the products and the
services such as finance and insurance, consumer banking, corporate banking, investment
banking, mortgages and facilities of the credit cards. The Westpac bank also helps to manage
the global wealth of the company. The Westpac bank provides its services across the 1429
branches with the facility of the 3850 ATMs around the world. The banking industry is the
competitive industry and the competitors of the bank are the ANZ banking company and the
Commonwealth Bank (Vincent, 2016).
Pestle Analysis
The pestle analysis of the company is to basically give a detailed analysis of the external
factors that are going to affect the working and the operations of the banking company. The
external environment is a crucial environment and therefore the company shall have a

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scrutiny of the factors such as political, social, technological, legal, environmental as well as
economical.
Political
There are various regulators of the political nature that will affect the performance of the
company. The major gaps of the political factors are the bridge between the governments and
the privatisation. Due to political imbalance in the country for the exchange of the money the
traditional policies infused the labour party. Due to the financial deregulation the company
gets mostly affected and which leads to the charges and the cut down services (Schlagwein,
Thorogood and Willcocks, 2014).
Technological
The technological development and the digitalisation of the media is what is the most
important factor in case of the banking company. The recent improvements in the payment
and the withdrawal of the money from the ATM easily can be a technological development.
Apart from this the technological development are the bank’s own website to cater the needs
of the customers and the transfer of the funds from one account to the next account is
possible (Phillips, 2017).
Social
The social factor of the pestle is the most important factor as it talks about the customers as
well as the employees at the same time. It truly depicts the key variances in understanding the
customers and at the same time delivering the services according to their preferences. As per
the analysis from the annual report the Westpac reached its target of having 50% of its
leadership positions held by women (Westpac, 2018).

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Economical
The economic factors also pose a great thought in the analysis of the external factors that
affect the organisation. The strengthening of the capital framework and the stronger impact of
the operations are viable for the purpose of the future. Currently GDP of the Australians is
the higher than the UK, Germany, France and the fluctuations due to the inflation and
deflation is one of the basic reasons to affect the performance of the Westpac banking
Company (Dell'Atti, Trotta, Iannuzzi and Demaria, 2017).
Demographic
Moreover, the global high-performance benchmark for large companies and a remarkable
increase in a year for a company with over 39,000 employees is what makes the bank one of
the top four banks in Australia. Demographics and mandatory pensions supporting double
digit growth in wealth management (Westpac, 2018)
Global
The existing banks do enjoy the economies of scale with the probability of providing the
wide range of products to the along with the fact of the low costs. Moreover setting a new
brand against the existing once will take number of years in which the existing banks can
revamp their old policies and set up new and innovative products as well as the services
(Nott, 2018).
Physical
Physically the Westpac Banking Company shall have all he assets to cover the liabilities.
Moreover the physical factors also affect the performance of the company. The factors such
as the growth and the environment of the company shall be in association with the laws ad
regulations. The company shall devise the policies that are supporting the live system and the
ecosystem (Pearson, 2017).

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Environmental
The quality and the culture is what make the bank a reliable one and therefore there are
several factors such as the environmental factors which affect the performance of the
Westpac Banking Company. The Westpac has retained its position on the DOW jones
Sustainability index and to critically follow the environmental policies. An updated change in
climate and the renewable sectors are also revamped critically. The Westpac has also
improved the energy resources and thereby the effect can be lower down when compared to
the other environmental strategies of the competitors (Pearson, 2017).
Legal
There are various amounts of the laws and the regulations that the company needs to comply
with are the Environmental protection Act and the US Securities exchange act. Westpac’s
New York branch and Westpac Capital Markets LLC maintain an anti-money laundering
compliance program designed to address US legal requirements. To study the clients, the
auditing of the report also plays a vital role in affecting the legal aspects of the Westpac
Banking Company. Moreover the new regulations imposed by the legal authorities are also
going to affect the performance of the business (Grant, 2016)
Industry Environment
The analysis of the industry environment is the structure that analyses the business and the
strategies developed by the Michael E. Porter. The company revolves around the five major
forces and which have been outlined below.
Bargaining power of the Customers
The buying power of the Australia in the commercial bank is mainly the individuals and the
households for the purpose of the retail banking and the business for the borrowings.
Customers in this industry have the bargaining power to switch from the regional to national

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or the foreign banks. Even when the cash rate is set typically low by the RBA, the
commercial banks are required to form a competitive rate of interest in order to create
completion. Since the cost of the funding id heavy there is a fall and steep down in the
revenue of the Westpac Banking Company. Therefore under this scenario since the power of
the buyer is not concentrated, the buyer’s power poses moderate danger to the profit of the
industry (Murray, 2014). demographic, physical and global, Missing
Bargaining power of the suppliers
The main suppliers of the commercial banks like Westpac Banking Company are the
customers, accounting services, financial as well as the legal services. Majority of the banks
raise funds though the deposits made by the customers and the offshore funding,
securitisation. Unlike the domestic banks, the foreign banks do not have the much deposit and
they mainly depend on the capital received from the offshore. The net interest margins of the
regional banks have increased after the global financial crisis of 2008. In order to capture the
greater deposit share the banks offer high rate of the deposit return and therefore the
customers can run to any banks. Under this situation the supplier power is not concentrated
and the threats posed by the supplier are of medium amount, hence the bargaining power of
the suppliers is not going to affect much on the Westpac’s workings (Jackson, 2016).
Threats of new Entrants
The entry of the new threats in the industry is pretty low because of the requirement of huge
amount of the capital which needs to be invested before entering as decided by the APRA.
The cost of switching and the economies of the scale are also the contributing factor in posing
less threat of the new entrants. Under the Basel II framework the minimum capital
requirement was determined. But as a result of the financial crisis the Australian banking
industry adopted the Basel III (Wall Street, 2016)

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Availability of the substitutes
After the financial deregulation there are four major types of lenders and there a wide range
of substitutes available to the customers in case of the commercial banking. Among the ADIs
customers are able to the use the power of the other institutions in place of the commercial
banks and credit unions. But in the major scenario the ADIs are not the major threat but the
financial companies, investment banks and the general financiers that can offer the similar
products. The customers are less sensitive to the price changes and they run more towards the
quality hence, the threat of the availability of the substitutes are moderate as per the market in
case of the Westpac Bank (Franke, 2017).
Rivalry among the existing players
Rivalry may exist among the competitors and the existing players in the basis of the size or
scale of the company. Majorly the rivalry exists because of the innovation and the quality in
the products and the services provided by the banks on the basis of the product
differentiating. The investment in the technology may reduce the profit for once yet in the
longer run this will be helpful against the rivalry with the existing players. To maximise
profit, banks commonly apply the bundle of the strategies and also the two sided market
strategies. According to PwC the revenue growth of the industry is always settled down by
the increase in the credit demand as well as the home loans as a result of the low interest rate.
Since the products and the services are the industry concentrated, we conclude that the
existing competitors impose the medium level of threat (Keating, 2008).
Competitive Environment
Capabilities of the company
The major capabilities of the Westpac Company is to engaged into piloting its Lean
Techniques across the 12 branches in the 3 of the five banks and the brands (Westpac, 2018).

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The Westpac has also extended its efforts in the line of the Six Sigma and both the frontline
as well as the backline options the company is engaged into training of the employees
through the lean workshops and analysing the risk management techniques. The Australians
are contended as their money is safe and secure.
Strategies the company follows
The company follows the customer driven strategy and seeks to deliver on this vision by
building the deep and enduring relationships with the customers and being a position leader
in the community and delivers the best people and gives the shareholders the premium
returns. The company focused on our core markets of the Australia and the New Zealand
which provides the wide range of the products and the focus mainly on the customer growth
and the chosen segments to build the stronger relationships.
The strategic priorities of the Westpac includes the Service leadership, digital transformation,
Performance Discipline, Growth Highways, workforce Revolution and to maintain the
sustainability and to provide the integrity and continue to empower the diversity and the
inclusiveness (Luke, 2017).
Opportunities
The major strength of the Westpac Company is the 200 year old brand with a wide range of
the banking and the financial services. The strong level of the capital structure places the
Westpac in the top quartile range of the other banks such as ANZ Company, Commonwealth
Company (Westpac, 2018). The Westpac have also received a higher and the impressive
ratings and citations on the global indices. The development of the strong customer and the
consistent growth of the customer franchise is one of the major opportunities with the
Westpac Banking Company (Woods, 2018).

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Threats
Financial sector is an important organ of an economy ad yet it is exposed to many threats
such as changing in the banking regulation by the government and changes in the economies
of scale will have a major impact on the performance of the Westpac.
The consumer centric rise of the fintech is again the major competition to the Westpac
Company and hence is the major threat to the traditional banking players (Woods, 2018).
Tangible and Intangible Analysis
The tangible analysis of the company starts with analysis of the book value of the assets close
to 1466 million and this has been increased by 5% as compared form the previous year, the
tangible assets are necessary to perform the operations further. On the contrary, the intangible
analysis is an important analysis since it provides the value of the non-monetary resources
which in fact is important scenario. The monetary value can be seen through the figures but
the non-monetary value can be felt only through the responses of the customers. The value of
the intangible assets as on 31st March 2018 is 11652 and has been increased from the previous
year which was 11520. The external orientation of the economy showcased the mixed
economy of the intangible assets majorly involving the exploration of the mining which were
up by 10%, while the in non-residential buildings and transport equipment fell down
(Skroupa, 2017).
Core competency Test
The core competency of the Westpac Banking Company is the ability to provide the solutions
to the financial problems and to advise the clients over the investments for the future
purposes. The motive of the core competency of the Westpac Company is to meet the

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expectations of the customer and to exceed the benchmark set so that the company can steer
the intended outcome quickly.
The Westpac has also extended its efforts in the line of the Six Sigma and both the frontline
as well as the backline options the company is engaged into training of the employees
through the lean workshops and analysing the risk management techniques. Fundamentally as
per the core competency tests the capacity of the bank to give the monetary administrations
go under the class of the resources in which the assurance of whether the assets are
sufficiently skilled to provide the benefits to the customers are recorded (Keating, Quazi,
Kriz and Coltman, 2008).
Information system solution and evaluation of systems and recommendations
In the world of the automation and the evolution through the digital medium, the Australian
banks are not behind the pace of the technology. The Westpac Bank must engage into the
designing of the portfolio of the financial service brands, which enable to appeal to a broader
range of the customers and provide the flexibility to the solutions that meet the needs of the
customer in a better manner. The bank shall introduce the faster and the simpler way to make
payments via ID of the Pay ID or a BSB and the account number (Nott, 2018). Hence it is
recommended that the Westpac shall introduce new digital mediums to cater customers with
new solutions.
The second major evolution of the information system and the technology is the evaluation is
the Westpac’s rivals and has also been the mounting major in training its employees and the
programmes in the recent month. Westpac shall also launch the internal IT University
through the publishing of the online courses regarding to the future technologies. Around
4000 of the employees are working in the Agile teams and this technological development

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not only helps to evaluate the performance of the employees but also it gives the new kind of
perspective and the abilities to the mind of the employees (Hull, 2002).

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References
Dell'Atti, S., Trotta, A., Iannuzzi, A.P. and Demaria, F., (2017) Corporate social
responsibility engagement as a determinant of bank reputation: An empirical
analysis. Corporate Social Responsibility and Environmental Management, 24(6), pp.589-
605.
Franke, M., (2017) Innovation: The winning formula to regain profitability in
aviation?. Journal of Air Transport Management, 13(1), pp.23-30.
Grant, R.M., (2016) Contemporary strategy analysis: Text and cases edition. United States:
John Wiley & Sons.
Hull, L., (2002) Foreign-owned banks: Implications for New Zealand's financial stability.
New York: Springer.
Jackson, S., (2016) No variance for filed orders: Hayes v Westpac Banking Corporation
[2015] QCA 260. Proctor, 36(2), pp.42-43.
Keating, B., Quazi, A., Kriz, A. and Coltman, T., (2008) In pursuit of a sustainable supply
chain: insights from Westpac Banking Corporation. Supply Chain Management: An
International Journal, 13(3), pp.175-179.
Luke, B., (2017) Statement of social performance: Opportunities and barriers to
adoption. Social and Environmental Accountability Journal, 37(2), pp.118-136.
Murray, D., Davis, K., Dunn, C., Hewson, C. and McNamee, B., (2014) Financial system
inquiry.

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Nott, G. (2018) Westpac’s CIO on banking’s next technology [online] Available from
https://www.cio.com.au/article/640660/westpac-cio-banking-next-technology-battleground/
[Accessed on 30th August 2018]
Pearson, G., (2017) Further challenges for Australian consumer law. In Consumer Law and
Socioeconomic Development (pp. 287-305). Springer, Cham.
Phillips, N., (2017) Legal threat exposes gaps in climate-change planning. Nature
News, 548(7669), pp.508.
Roy, M.J., Dostaler, I. and Fiset, J., (2015) 11 Governance and environmental
performance. The Global Commercial Banking Industry, p.344.
Schlagwein, D., Thorogood, A. and Willcocks, L.P., (2014) How Commonwealth Bank of
Australia Gained Benefits Using a Standards-Based, Multi-Provider Cloud Model. MIS
Quarterly Executive, 13(4).
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market [online] Available from
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affecting-company-value-in-the-stock-market/#37de7a922b8e [Accessed on 30th August
2018]
Vincent, J., (2016) Westpac Banking Corporation v Wittenberg (2016) 330 ALR
476. Brief, 43(11), p.21.
Wall Street, (2016) What are accounting polices? [Online] Available from
https://www.wallstreetmojo.com/accounting-policies/ [Accessed on 20th August 2018]

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Westpac, (2018) Our strategy [online] Available from https://www.westpac.com.au/about-
westpac/westpac-group/company-overview/our-strategy-vision/ [Accessed on 30th August
2018]
Woods, R. (2018) Australian to revamp IT with lean Six Sigma [online] Available from
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