Strategic Management Report: Cryptocurrency's Impact on ANZ Group

This report provides a strategic analysis of the impact of cryptocurrency on the ANZ Group, a major banking institution in Australia and New Zealand. It begins with an introduction to strategic management and the context of ANZ Group, highlighting its market position and global presence. The report then delves into the strategic background, including the bank's history, operations, and expansion strategies, particularly in the Asia-Pacific region. A PESTLE analysis examines the political, economic, social, technological, legal, and environmental factors influencing ANZ Group, with a specific focus on the implications of cryptocurrency's decentralized nature and potential impact on the banking sector. The competitive environment is assessed using Porter's Five Forces model, evaluating the threats of new entrants, bargaining power of suppliers and buyers, the threat of substitute products, and rivalry among existing competitors. The report concludes with a discussion of the challenges and opportunities that cryptocurrency presents to ANZ Group, offering insights into how the bank can adapt its strategies to remain competitive in a rapidly evolving financial landscape. The analysis underscores the need for ANZ Group to anticipate technological changes, comply with evolving regulations, and understand the social and economic impacts of digital currencies like Bitcoin.

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Strategic Management
Contents
Introduction................................................................................................................................3
Strategic Background.................................................................................................................3
Strategic Environment................................................................................................................3
Competitive Environment..........................................................................................................3
Strategic analysis........................................................................................................................4
References..................................................................................................................................6

Strategic Management
Introduction
The process of planning, scrutinizing, analyzing and assessing the all the required processes
and operations for making the fulfilment and accomplishments of the targets and determined
objectives can be termed as strategic management (Barney and Hesterly, 2010). Fast-paced
innovations, emerging technologies and customer expectations force organizations for
thinking and make decisions strategically for remaining successful. The below executed
analysis is focused on impact of Crypto-currency on ANZ Group in Australia.
Strategic Background
The ANZ Group or the Australia and New Zealand Banking Group Limited is the third
largest bank for market capitalisation after commonwealth bank and Westpac Banking
Corporation in Australia. Their operations are mostly Australian, with the domination of
commercial and retail banking (Abril and Cánovas, 2016). It is also the largest bank in New
Zealand as well and it became the legal entity as ANZ National Bank and changed into ANZ
Bank New Zealand in 2012, in the same year it retired and a number of branches closed and
converted into ANZ branches.
ANZ is one of the well-renowned brand names in the sector of Australian banks in the Asian-
Pacific Region. With expanding markets in China, Vietnam and Indonesia. It is also present
in many Pacific Island Nation where it competes with a lot of Australian banks. Its arm in
New Zealand is a subsidiary company of the ANZ National Bank in 2012. A strategic
alliance was formed in 2005 with the Vietnam’s Sacombank which had an acquisition of 10%
in the share capital. And as a part of the strategic alliance they provided the technical
assistance in risk management and small business banking.
A similar Chinese strategy is followed by ANZ group and that is of acquiring the 20% share
in Tianjin City Commercial Bank in 2006. In 2009, ANZ had retail units in Taiwan,
Singapore and Indonesia as well as RBS’s banking in Taiwan, Philippines and at a price of
687$ million. By 2012 the company had 1337 branches all over the world. And by 2016 it
adopted a less aggressive way to expand in the Asia-Pacific area in low returns. In 2016 ANZ
did the sale for the Asian retail and wealth management to the operations of the Development
Bank of Singapore which was a withdrawal from the Asian Pivot.

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Bitcoin is one of the digital currency in which the techniques and mechanisms of encryption
are utilized for regulating the generation of units of currency and verifying the transfer of
funds. This currency is operated independently of a central bank. Bit-coin has been
considered as the most famous example of an developing technology that have a potential of
bringing advancements in the banking sector. By making use of the elegance of mathematics
Crypto-currencies enable almost instant transfer of value at minimum or no expenses between
two parties without the need for a trusted third party.
ANZ had been advancing and developing its work from the offshore offices. ANZ has a
Bangalore office since 1989 one of the first in India. There was a: Lost in Space robot and a
Dalek from Doctor Who for advertising purposes (Armstrong, Adam, Denize and Kotler,
2014).
Strategic Environment
Pestle Analysis
Political
Due to the increasing growth in the business environment of the banking sector and that is
why the geo-political environment has an impact on the profitability and the operations and
same is the case for the ANZ Bank (Bakker, 2014). The political unpredictability in Iraq and
the war by the US and the defied attitude of the North Korea in the past and also the
increasing terrorist activities everywhere in the world will be stimulating the business
environment. The political conflict in the Pacific Region like Fiji, Solomon Islands all had an
impact on the major economies of the world and of these regions and then affect the growth
of the banks and the investment business prospects in these areas. On the basis of the research
it has been noted that Crypto-currencies have had a strong political climate that is aiding
them in gaining popularity. One of the most empirical impacts of crypto-currency is
decentralization of money issuance and also the crypto-currencies are not under the control of
governing authorities. The crypto-currency is decentralized because the government does not
back them and hence the users are transacting directly without interference of the state. And
these all are the reasons that depicts the impacts of crypto-currencies on the ANZ Group.
Economic

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The world economic variants are one of the factors that are obviously having tremendous
impact on the bank’s revenue generation abilities. The ANZ economic environment had been
positive and the same thing has been expected for the future as well. The Australian economy
is centred and also had been in a growth phase and is continuing and that has been considered
as an impressive accomplishment and these developments and advancements will continue
(Buckingham, 2011). Although the growth rates for New Zealand is not that great.
Nevertheless the overall environment is positive and showed a lot of business opportunities in
the next few years.
Technological
Technology also played a factor in the overall working efficiency and consumer satisfaction.
Technological trends and fluctuations are very much liable in influencing the business
operations of the business entity and for coping up with the ever changing and developing
environment the entity is required to keep itself up-to-date. For the bank to remain in the
competitive market the bank had to anticipate technological changes and form a strong
strategy (Carroll, Primo and Richter, 2014). ANZ uses specialists to improve the
technological skills and to give in new and better technologies for the risks and opportunities
for the risks in the budding technologies like the bank had introduced complete digital
certificate system that serves a safe online environment for the customers. This had helped
ANZ to trust and security initiatives for a global position for a global leader.
Legal
All the financial institutions are supposed to comply with basic standards of it. The same
conditions apply to ANZ and had operations for a large number of nations affected by the
regulations and the law in every jurisdiction (Cortez, Tu, Anh, Ng and Vegafria, 2014). Thus
it had to lay down standards which complied with the global legal framework. For example,
the bank requires operating with the requirement of the Banking Act 1959 and had to keep an
Australian Financial Services Licence. The bank took part in many advisory bodies of the
government to indulge with the governing authorities on a very timely basis as well as the
corporate governance strategies in compliance with the standards of the government
guidelines. Due to decentralization of crypto-currency there is no control of the governing
authorities and hence no interference can be done by the state. And this is the main reason
due to which these currencies have minimum legal limitations. The CEO of ANZ group
Shayne Elliott said that Hayne royal commission marks a "watershed moment" for the

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banking sector but warning to the shareholders is also given notifying that slower loan
growth. "The royal commission impact is real (Shapiro and Eyers (2018). " Mr Elliott said as
the lender reported a $3.45 billion half-year cash profit, which was up 4 per cent and
matching consensus expectations.
Social
The social factors had various risks for the financial associations in their lending practices
and same is the case for the ANZ. That is why the bank had established a social problem
policy to scrutinize and identify the probable risks in the credit approval phases (Daspit,
Chrisman, JSharma, Pearson and Long, 2017). The bank has client processing tools to help
out the approval process and identify risk borrowers like their social standing. And also, the
bank had associated the Equator guidelines which had assisted in developing the social and
the environment rules and regulations which had applied for the lending and the investment
in developing countries. All these helped the bank reduce the effect of the social variants and
identify the business openings for the social environment.
Competitive Environment
The diamond business model has been developed by for the business organizations to aid
them in understanding their competitive position in the international markets. This Porter
diamond model is also known as Porter Diamond Theory of National Advantage and this is
because all the factors that are significant in the in international business competition
resemble the points of a diamond. The below presented is the
Five force analysis
Threat for new entrants
The new entrants bring in innovation in doing things and have put pressure on Australia And
New Zealand Banking Group Limited by a low pricing strategy, reduction in costs and giving
new value to the customers (Dhariyal, Negi and Kothari, 2017). Australia and New Zealand
Banking group has to handle all these risks and develop effective barriers to protect against
the competitive edge.

Strategic Management
 By emerging and launching new products and services the business entity not only
attracts new customers to fold in but also the existing customers get a reason to buy
Australia and New Zealand group’s products.
 The economies of scale can lower to lower the fixed cost per unit.
 Expenses incurred on the research and development (Djenontin, Foli and Zulu,
2018). The new competitors are not probable to enter a very active sector where the
market leaders keep describing the ethics. It has significantly reduced the window for
the extra profits for any new firms and therefore discourages new players.
Bargaining Power of Suppliers
Vendors dominate the position and can reduce the margins of Australia and New Zealand
Banking Group Limited and can earn that in the market (Duffy, 2011). All the powerful
suppliers in the banking sector are making use of the exchanging power to get a high price
from the firms in the Banks of field. And the total effect of the vendors bargaining power is
to lower the total profitability of the banking institutions.
 By having a good supply chain and that too with multiple vendors.
 By experimenting with design of the product for the various materials for the rates to
go high of one material and then shift to another.
 Dedicated suppliers who are dependent of the business of the firm. One thing they can
learn from their competitors is how the business organization advanced a third party
producer and the business and it completely depends on creating the picture where
these people have les bargaining power like Wal-Mart and Nike.
Bargaining Power of Buyers
Buyers are challenging and they want to get best services available for paying the least rate
possible (Eden and Ackermann, 2013). These requirements pressurize the business
organizations with a higher negotiating power for the customers and an even advanced
aptitude to look out for the increasing the discounts and the offers.
 Developing a large customer base, will minimize their haggling power and also offer
a chance to the business entity in streamlining the sales and the production.
 By developing and launching new products. Customers look for discounts on the
normal products so the Australia And New Zealand Bank to keep on bringing new
ideas for products which will limit the haggling ability of them buyers.

Strategic Management
 New products also decrease the defection of the already existing customers of the
Australia And New Zealand Banking Group
Threat of the Substitute Products of Services
Whenever a new product meets a similar needs of the customer in different ways, the industry
profitability suffers. Like Drop-box or Google Drive with the substitute storage hardware
devices (Foxall, 2014). The threat is high then it offers a value proposition for the uniquely
different offering in the industry.
 Service oriented rather than being product oriented.
 By knowing the core need of the customer that what is the customer is buying.
 Increasing the cost of switching for the customers.
Rivalry among the existing users
If the rivalry is intense in the industry it will lower down the prices and also decrease the
overall profitability as well (Helmuth, 2018). Australian And New Zealand Banking Group
Limited operates for the banking industry. The competition takes a toll on the long term
profitability of the organisation.
 A sustainable differentiation.
 Building a scale to compete better.
 Collaborating with the competitors to improve the market size to compete a small
market.
Strategic analysis
The Australian crypto-currency exchange the coin spot and gave warnings for the liquidity
issues due to a lot of customers cashing rubbish.
In December 2017, Coin spot announced it was suspending the Australian dollar deposits for
the problems going on with the local banks and the outrage among the investors. These
temporary restrictions on the AUD deposits and will remain in effect till a very long time.
Trading on a platform that will operate as normal (Kalutara, Zhang, Setunge and Wakefield,
2018). The blanket policy banned the crypto-currency purchases a lot of customers
complained to have their accounts being closed. ANZ exercised its discretion to close an
account for the unsatisfactory behaviour or any other reason. It does not stop its customers
from buying digital currency. The entire idea was to control money laundering to catch

Strategic Management
terrorists and criminals (Lemoussu, Chaudemar and Vingerhoeds, 2018). And the tricky thing
was the customer was to require the bank to treat it like a threat. Bit-coin is a favourite thing
of the criminals so it has special attention with the bank compliance officers. That applies to
the bit-coin and bank as well.
Australian Banks allegedly blocked the digital currency and froze accounts.
Bit-coin has been viewed as an investment class and what others think of it as scam or big
opportunity to start off as the currency in the internet. This year 2018 the currency war
between the worlds’ largest developed economies and the business owners said that a fairer
playing field is needed which is free of extreme inflation and will erode the pricing power
and disadvantage the people with a few monetary levers to pull. The spurred by the volatility
and the government manipulation in 2018 crypto-currency takes off. It has resulted in fewer
purchases in the overseas market like those who shop on amazon with fewer ATM
withdrawal fees and never require ATM’s. Crypto-currency transactions are free with fewer
loans and fewer accounts for the term deposits as online crypto-currency offerings to have
better returns.
Bit-coin has many flaws relating to the crime related transactions, fraud and lack of
transparency. But like many leaders in the market the newer currencies are learning from the
mistakes of the old ones (Lindsay, Goia and Yip, 2018). Crypto-currency is yet to gain its
place in the future. The impact can be huge or tiny positive or negative if the banks could
figure out how to make from it. Right now its just a risk for the investors and they need to
investigate first.
Recommendations
Decentralised derivatives
The traditional market has option like the derivatives which protects the investors and the
asset holders and the business owners against volatility. It can be a key for stabilizing the
price of the crypto-currencies and makes them asset reliable enough for exchanging goods.
Crypto-currency funds
They provide for the broad variety of investment opportunities handled by experts and
lowering the risks and costs at the same time. It is created by the eToro’s investment

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committee to provide a solution for all those looking for better way to find a sound strategy to
break the investments wisely
Custom coins
It has provide companies with technology like block chain. In a nutshell it involves the
issuing a project token which the investors and users will purchase with the crypto-
currencies.

Strategic Management
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Strategic Management
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