Introduction
A strategy is essentially a high level plan that is used by an organization to achieve one or more goals under uncertainty conditions. The concept of strategy therefore becomes ever crucial when it is suspected or is known that insufficient resources are present to achieve the desired goals. It is thus about both attaining and maintaining an advantageous position over adversaries through successive exploitation of emergent or known possibilities rather that an institution committing to particular fixed plan that is actually defined at the onset.
Strategy formulation is the task of a manager in every institution hence it is a requirement for every manager to understand how strategies are formulated in their businesses and in turn how the formulated strategies are applied in shaping the direction and the activities that their organizations are committed (Johnson, 2010: 15). For a business to adopt a good strategy it needs to acquire the services of strategy consultants and planners who on their part are required to have a better understanding of the strategic decision making nature, and leadership in addition to management in current increasingly globalised and competitive business environment.
It is therefore the task of the management to select strategy consultants and planners who posses the basic skills in the formulation of strategies and with this their organizations will achieve the desired goals more efficiently (Johnson, 2010: 35). As a strategy consultant in a management consulting firm, Investec Bank, which is an international asset management and specialist banking group, has sought our services. What the organization wants is a strategic review that is to be carried out and which ultimately will assess the overall strategic direction in this organization.
Briefly, Investec Bank is a financial services and products provider in four major markets which in this case are in South Africa, United Kingdom, Ireland, and Australia. It is headquartered in various headquarters. It is actually a FTSE 250 company and in addition it is listed on Johannesburg Stock Exchange and London Stock Exchange. The financial services provider was established as a small financing and leasing company in Johannesburg in 1974 by Errol Grolman, Ian Kantor, and Larry Nestadt. In fact, the company has expanded through strategic acquisitions and organic growth combination among other development strategies.
Recent strategic development history of Investec Bank
The financial services provider has actually used strategic acquisitions in its development. Investec secured its banking license in the year 1980 and it was initially listed on JSE Securities Exchange in 1986 after it merged with a trust company by the name Metboard. It was actually restructured into the Investec Group Limited in 1988 hence this gave its staff and management control of the company. It acquired a property management company in 1990 by the name Kuper and Company Limited; Reichmans limited which is a trade finance company, and Corporate Merchant Bank Limited.
In 1992 it entered the United Kingdom market through acquiring the London based Allied Trust Bank Limited and this essentially formed the initial international acquisition by this group (Grant, 2010: 98). It actually continued in its strategic development where in the year 1998, the company acquired Guinness Mahon that is a leading merchant bank in London together with its stock broking arm by the name Henderson Crosthware for £95m. In the same year, Investec bought Hambros plc, another merchant bank in London. In 2002, the company was listed in London Stock Exchange.
In the year 2003, a transaction by the name Black Market Empowerment acquired 21.5% stake in South Africa listed Investec. Investec in 2005 sold the UK private client stock broking operation that it owned. Carr Sheppards Crosthwaite Limited was sold to Rensburg plc. The company retains 47.7% interest in combined entity of Rensburg Sheppards. It has continued in its acquisition strategy where in the year 2007 it acquired the Experien property limited and Kensington Group.
In 2010, it acquired the outstanding shares in the Rensburg Sheppards plc. Investec has also banking operations in Mauritius, Switzerland, Hong Kong, Botswana, Guernsey, Canada, United States, Namibian, and Taiwan. The company is in addition organized like a network comprising 6 business divisions. These include; Asset Management, Property, Wealth and Investment, Capital Markets, Private Banking, and Investment Banking. Therefore, the Investec strategy with regard to the acquisitions has been to concentrate on the organic growth through capturing deal flow, building loan portfolio selectively, and building the third party assets under the management. In other areas, Investec has been considering and evaluating bolt on acquisitions carefully that in turn has been expanding the position of its core businesses in addition to delivering competitive advantages more efficiently and quickly. This macro strategy has been very crucial in the strategic development of the company.
Apart from the strategic acquisitions that Investec has been using for along time, it in addition offers various accounts that are also vital to their strategic development. The company personal savings account that it has operated since it was formed has in fact made it to achieve its strategic development. Investec provides personal savings accounts that are innovative in nature and in addition these personal savings accounts have interest rates that are actually attractive. The strategy of the institution is says that for a person to be in control of his or her finances what he or she needs is only to access accounts that are secure and convenient. Therefore, the financial services provider strategy have been to provide personal savings accounts that are secure and at the same time convenient. Their personal savings accounts have additionally been transparent and flexible (Grant, 2010: 109). The other strategy that they have been using is training their banking team so that they have experience to offer professional attention in the banking requirements of its customers.
Investec High 5 issue 2 account is the other account that the organization has been operating for quite some time. Their strategy in this account has been to shop around in order to make sure that their customers receive a competitive rate that is consistently. The interest paid in this account is essentially set independently where it is updated on a weekly basis. This interest rate is in addition paid annually or monthly where it can be paid away to the other building society or UK bank. The customers have also been in a position to access their accounts with a click of a mouse as Investec have been providing an online banking access.
The experience that its banking professionals possess have been useful in providing an account opening process that is simple with a minimum deposit with minimum balance that earns interest. Investec High 10 Account has been the improvement of the previous Investec High 5 account where with this account the customers do not need to spend a lot of time shopping around for the savings interest rates that are best. These two together with other savings account have been offered by the company to show that it protects its customers’ money. This has actually been a good strategy which Investec has been using since it was founded to attract more customers in addition to retaining the old ones and as a result this has contributed to its strategic development for all that time and continues to do so. This strategy has helped the company to compete fairly at the finance industry.
The company’s’ strategic goals have and continue to be motivated by its desire to develop a business that is integrated and efficient on international scale through a pursuit that is active and established cores that have competence. The company has modified its various savings accounts from time to time and this has in fact been a major boost for its strategic development history (Grant, 2010: 112). In addition, Investec has acquired various sponsorships especially in sports where it has been in a better position to market itself throughout the world as this advertising strategy reaches millions of population who are fans in various kinds of games. For instance, the company has become the official sponsor of Tottenham Hotspur’s shirt in the UEFA champions’ league and domestic cup games for the 2010/2011 season in addition to the UEFA Europa League. Apart from sponsoring football games, Investec has been sponsoring rugby games throughout the world together with other games like horse racing, cricket among others. As mentioned, the company has been using this advertising strategy so that it can reach many of its customers since in games there are many potential customers. This strategy has been very important in competitive environment where it has competed successfully.
Current Strategic Situation.
Investec continues to provide a wide range of financial services and products to a niche client base in 3 chief markets these are, Australia, United Kingdom, and in South Africa, as well as in other geographies. The company currently is employing corporate governance that is sound enough (Doole, 2005: 37). This sound corporate governance is actually embedded in its culture, values, functions, processes, and organizational structure. This is a strategic policy that this company believes will guide it in achieving its goals. This is an industry strategic to ensure that it will continue to follow the correct path in its goal achievements. Therefore, the company board provides leadership that is based on ethical foundation since one of its strategy is to follow the various ethical requirements that all the organizations are required to follow. On the other hand, every employee and each business area is required to be responsible for their actions. In the formulation of its governance strategy, the company apply corporate governance practices that are recognized. Thus, under this, the strategy of the company is to both build and sustain a corporate culture that is ethically upright as required in the finance industry. This strategy also is aimed to promote sound and informed decision making. It is also a requirement for the companies providing finance services to have accountability, efficiency, and responsibility hence this current strategy in the company ensures that Investec conforms to these requirements.
The current strategy in the company aims to make sure that the company continue to build a business depth in its attempt to enhance the existing client relationships. Investec’s strategic objectives and goals are actually based on its aspirations to become recognized as a specialist asset and bank manager who is distinct. This company’s distinction lies in its entrepreneurial culture that is actually balanced by its client centric approach, ability to be flexible, nimble, and innovative, and strong risk management discipline (Doole, 2005: 89). The company strategy is actually not to try to be the all things to all the people. Instead, according to this strategy, the company aim to build businesses that are well defined and value added and in addition businesses that serve the market niches needs that it can essentially compete effectively.
Investec current strategic focus on various things that it believes will aide it in achieving the desired goals that it aims to achieve. Firstly, the current strategy focus to build revenue that is low capital intensive. This means that the aim of the company is to have revenue that is highly contributed by the other factors of production apart from the capital.
This current strategy in addition aims to tightly manage the production and other costs while at the same time investing for the times to come. It is thus the objective of the company to reduce all the costs as much as possible so that its revenues will continue increasing and as a result the company will be in a better position to continue investing in future. Maintaining appropriate levels of liquidity and capital is the addition aim of the current strategy of the company (Doole, 2005: 67). Moreover, Investec current strategic focus is to capture the investment and trade opportunities between the emerging and developed economies. This is in fact a macro strategy as it aims to increase the investments of the company globally. In addition to this completing integration in investment and wealth is the other macro strategy of the company in addition to its continuance in internationalizing the offering. This current strategy of the company furthermore aims to continue the company’s path of implementing its current single bank strategy that it believes will create extra operational efficiencies together with better services to its clients.
The company is endowed with various internal resources hence this current strategy aims to provide a means where the company will avoid any wastage whatsoever. Therefore, the endowments of these resources provide competitive advantage to the company as it will be in a position to apply the bundle of valuable tangible and interchangeable resources at its disposal. The main advantage with these resources is that they are heterogeneous and are not perfectly mobile. Thus, the current strategy dictates that the transformation of the short run competitive advantage of the company into a competitive advantage that is sustainable will be easy with this resources endowment.
It is therefore evident that the focus of the current strategy of the company is actually something that will help it to achieve its goals in future. This is so because the main aim of the strategy is to make its operations in future become simple and efficient. The strategy current focus of reducing the current costs as much as possible is imperative as the reduced costs means that there will be extra revenues that will be invested in various projects of the company hence these investments provides avenues where the future strategy of the company is actually built upon.
Strategic Direction for the future
Investec’s sustainable future is actually its expression of the long term strategic directions that it has formulated. The company aims to use the plan that will guides its activities together with the organizational transformation which will ensure that it is actually well positioned for it to deliver on its goals, actions, and strategies. The strategic direction for the company’s future is based on its diversified business model. The company operates in 3 different spaces which include wealth and investment, asset management, and most importantly specialists banking.
Within specialist banking, the company have been and will continue to offer a wide range of services ranging from structuring, advisory, transactional banking, lending, investment activities, and treasury and trading activities. Therefore, the company’s future strategy is to better these services and with this it will achieve its strategy for the last 20 years that has s been to build a portfolio of businesses that is diversified in nature (Kim, 2005: 53). The business model also seeks to maintain a balance that is appropriate between the revenue earned from its operational risks activities and that is earned from the financial risk activities in future.
The various acquisitions that the company have acquired are important since they provide its expansion and development in the times to come. This is aimed at expanding its activities further so that it will not only provide financial services better but will also improve its provision of the other services as a result of these acquisitions. The various savings that the company also have put in place will also be imperative in future because the company will be in a position to create more credit and as a result of this will prevent the entire economies of where it operates from increasing the interest rates.
Since Investec inception, it has in fact expanded itself through a combination of both strategic acquisitions ands organic growth. The future internationalization of this company is based on various future strategies. One of these strategies is following their customers’ base and this will ensure that different customers’ needs are taken care of in future hence this will maintain these current customers in addition to attracting others. This is crucial as the customers usually trust its operations band as a result of this the company will continue in its development path. The other long term strategy involves facilitating Investec cross boarder transactions and flow. This future strategy is essentially in making the company achieve an international status in future where it will be in a position to operate in many countries globally.
The company’s management believes that for it to create a portfolio that is both balanced and meaningful, it needs appropriate foundations to be in place and this will make it to gain more transactions over time (Kim, 2005: 100). Investec’s lending and finance solutions for their professionals, entrepreneurs, corporate, and businesses are formulated in such a way that they will provide future investments for these groups. The interest rates that the company charges is believed that in future it will continue to decrease hence this encourages its customers to continue being loyal to it. However, for the company to continue with its development plan in future it has to go through various uncertainties.
Inflation is one of these uncertainties where the company will have to control it since in various economies it is a major controller of the economy (Weich, 2006: 13). Therefore, the company will have to consider the different business cycles that economies goes through over time in its future strategies formulation because with no regard to these, it can find itself operating at a loss in some business cycles like during recession period. The Investec managers therefore need to possess the basic qualities that the strategy formulators are required to posses or alternatively given that they are not well conversant with them hire the services of experts in the strategy formulation and implementation field.
References
Johnson, Scholes and Whittington (2010) Exploring Strategy 3th edition, London Prentice Hall Publishing.
Grant M. (2010) Contemporary Strategy Analysis and Cases, Wiley Publishing.
Doole I. and Lowe R. (2005) Strategic marketing decisions in global markets, London, Thomson Learning. Strategic Management 5th Ed (2008) R.Lynch, Prentice Hall Publishing, London, UK.
Kim C. and Mauborgne R. (2005) Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant, Harvard Business School Press, 1st Ed.
Weich P.J. and Weich G.F. (2006) Economiscs: Theory and Practice, Wiley, 8th Ed.
