Monday, December 9, 2019
Roles in the Management of Liquidity Risks Ã¢â¬ MyAssignmenthelp.com
Question: Discuss about the Roles in the Management of Liquidity Risks. Answer: Introduction The increasing competition in all business sectors demands regular analysis of internal and external factors. It allows the organizations to develop better strategies to maintain its market position against competitors. Established in 1982, The National Australia Bank (NAB) holds the position of one of the largest Australian banks. Headquartered in Melbourne, the organization operates through 35,000 employees working across Australia and New Zealand in 1600 branches. At the end of 2016 financial year, the revenue generated by NAB was nearly AU $ 17.42 billion (Turner, 2016). For analysing the macro environment of NAB, a PESTLE will be conducted here. Any change in macro-environment factors directly affects the working of the organization, so the analysis is required at regular intervals. With the help of the PESTLE analysis, NAB will assess the factors those may affect the operations of the organization and also help in strategic development (Fu, Lin Molyneux, 2013). For any company operating in any country, it is very important to keep a regular check on the political factors of the country and the world as it affects the company drastically. NAB deals with all major countries, so political factors play a vital role in determining the profitability of the organization in certain market or country. NAB is a part of the four pillars of Australian banking sector capturing approximately 11% of the market share (Kao Peng, 2012). The Australian Government policy of four pillars prevents the mergers of banks together that acts as a challenge to capture more market or develop techniques for it. Along with it, the Rudd Government has an Innovation Agenda that aims to support innovative Australian businesses. This government policy allows the organization to develop new business models that help in the growth of bank's customer base also develop new revenue channels for the organization. Apart from these two main factors other general political factors t hat can affect the organization includes anti-trust laws those are related to the banking sector, taxation rates, mandatory employee benefits, wage laws, bureaucracy, and tariffs and trade regulations ("National Australia Bank Limited PESTEL / PEST Environment Analysis[Strategy]", 2018). Economic Factors The position of the Australian economy has been resilient to the Global Financial Crisis. It is expected that soon the economy will recover. Due to the economic crisis, the organization suffered a loss of 14% profit decrease. The report published by financial stability review shows that due to the global economic crisis the organization may bear the bad debts of 0.6% in the coming years. The organizations should develop policies that could help the stakeholders to keep their investment safe with the organization. This will bring further investment in the organization keeping it safe from the challenges of global economic crisis and economic changes of different countries where the organization is conducting business. The other macro-environment economic factors that can affect the working of NAB in the coming future includes the fluctuating currency rates, saving rates, inflation rate, interest rate, and foreign exchange rate. It is suggested that NAB should use the indicators of cou ntrys economic factors like growth rate and the forecast of consumer spending to develop policies to capture the market segmentation and also attain desired organizational goals (Ojo, 2010). The culture and societal values affect the organizational culture. The shared beliefs and attitudes of the people are very significant to understand that how the consumers targeted by NAB should be approached. The design of the marketing message that communicates the thinking of the company to the consumers is designed as per the banking industry consumers. If considered the Australian population then a major part of the population includes the people who are above 85 years of age. So, developing policies that include the retirement policies and investing aged care industry will help the bank to receive good returns on investment (Banerjee, 2011). The other major section of the population is the generation Y that belongs to the age-group of 18-24 years. This group is more likely to spend their time in caf's, bar or restaurants thus any investment on the businesses on related aspects will help in gaining better returns. Though, the lack of generation Y's interest in community help may affect the interest of the generation of the bank and dilute the NAB's value proposition. The other economic factors that could impact the working of NAB include the demographics and population skills level, society's class structure and hierarchy system, Education level of the population, entrepreneurial spirit and investment culture of the society, etc. (Guerrieri Welch, 2012). Technological Factors The technology factor acts as the disruption for all industries. The changing technologies and innovative techniques hired by competitors impact the methodology and working of the organization. Being one of the major banks of the country, it is very important that NAB management should be aware of innovative technologies entering the banking industry. Like online banking has become a household name. Using it effectively and efficiently will allow the company to achieve major benefits. Though, the technology use also brings challenges related to online frauds and hacking. There are many examples present across the world where the data related to the customers of major banks were hacked by the online hacker and then misused the information to conduct frauds (Marcelin Mathur, 2014). Technology also opens doors for various new business ideas to strike the market. The world is preferring the use of technology. Therefore, investing in ideas related to technology and innovation can provide NAB better investment returns and success in capturing the market segment of new investors and entrepreneurs. The other technological factors those could leave an impact on the organization includes technological development acquired by competitors, the impact of the technology on the product and service offerings, the increasing value of technology advancement, the impact of technology on the banking industry's cost structure and the rate of technology diffusion (Olszewski, 2012). The organization's profitability structure can be affected by the different norms of the environment by different countries. With the increase in the demand for environmental sustainability, the banking industry is also forced to adopt the methods those are sustainable for example paperless banking, applications, online banking system. Apart from it the environmental disasters and mishaps and laws and liabilities related to them also affect the way an industry operates. Before entering into any new business venture, it is important to analyse the environmental condition of the country. For example, in the USA major storms occurrence is quite frequent which affects the working of all businesses operating. Investing in such companies can be threatening for NAB. The other environmental factors those can leave an impact on the working NAB includes the climate change, regulations and laws related to environmental pollution, and air and water, Recycling procedures, waste management, go gre en policies, supporting sustainability and cost of following the environment related implications of the banking industry (Turner, 2016). Legal Factors Different countries have different rules and regulations regarding the banking industry and investment portfolios. Entering into business with any company or country it is very important to analyse the legal factors those can provide support to the organization or act as a hindrance to effective working. Different taxation system, interest rate, trade policies, wages, all these are some factors those are bound by specific laws of the government. The use of the digital platform by the banking industry has given rise to various laws, rules and regulations related to the consumer security and investment possibilities and other banking operations. NAB is dealing with many countries across the world which demands the knowledge of laws and other legal factors that could impact the working of the organization. Certain legal frameworks and laws that should always be focused on while developing business includes the anti-trust laws in the bank industry and what is followed across the world, e -commerce and consumer data protection laws, property and copyrights laws, discrimination laws, Employment laws, health and safety law, and minimum wage and other important laws that may affect the working of NAB (Kao Peng, 2012). Conclusion Changing business trends and environment demands regular analysis for conducting effective business and developing the competitive advantage of the organization. National Australia Bank is one of the major players in Australia's banking industry. The paper presented here conducted a PESTLE analysis which is the analysis of macro-environment that impacts the working an organization in a country. The analysis shows that there are the lot of factors that could act against the company's effective working but, with well-developed policies and correct investment structure the company can achieve the desired market segment. The Australian government uses NAB as an important organization in managing the banking functions of the country and customers also believes the organization. Thus, with the correct use of factors that could bring positive change to the organization the company can develop well and achieve better profits in the coming future. In the end, the conclusion of the paper shows that the working environment for NAB is favourable and with focused thinking and correct business policies the company can expand its business on a higher level. References Banerjee, S. (2011). Macro Prudential Supervision and the Financial Crisis of 2007: The Aegis of the Central Banks.SSRN Electronic Journal. Fu, M., Lin, Y., Molyneux, P. (2013). Bank Efficiency and Shareholder Value in Asia Pacific.SSRN Electronic Journal. Guerrieri, L., Welch, M. (2012). Can Macro Variables Used in Stress Testing Forecast the Performance of Banks?.SSRN Electronic Journal. Kao, K., Peng, C. (2012). Production efficiency, input price discrimination, and social welfare.Asia-Pacific Journal Of Accounting Economics,19(2), 227-237. Marcelin, I., Mathur, I. (2014). Financial development, institutions and banks.International Review Of Financial Analysis,31, 25-33. National Australia Bank (NAB) SWOT PESTLE Analysis - SWOT PESTLE.com. (2017).SWOT PESTLE.com. Retrieved 22 March 2018, from https://www.swotandpestle.com/national-australia-bank/ National Australia Bank Limited PESTEL / PEST Environment Analysis[Strategy]. (2018).Fern Fort University. Retrieved 22 March 2018, from https://fernfortuniversity.com/term-papers/pestel/nyse4/4214-national-australia-bank-limited.php Ojo, M. (2010). Redefining a Role for Central Banks: The Increased Importance of Central Banks Roles in the Management of Liquidity Risks and Macro Prudential Supervision in the Aftermath of the Financial Crisis.SSRN Electronic Journal. Olszewski, K. (2012). The Impact of Commercial Real Estate on the Financial Sector, Its Tracking by Central Banks and Some Recommendations for the Macro-Financial Stability Policy of Central Banks.SSRN Electronic Journal. Turner, S. (2016). The Use of Macro Legal Analysis in the Understanding and Development of Global Environmental Governance.Transnational Environmental Law,6(02), 237-257.