Abstract
The NBC has continuously posted its earnings in the recent financial years despite the fast-changing consumer preferences, conditions of the market, and technology. This success proves that the bank is focusing on the correct priorities, and pursuing appropriate policies. Similarly, the strong performance of the NBC also affirms to the leadership quality throughout the bank plus the dedication of about 20,000 employees. According to the bank’s profile, it is an integrated group of banking that provides a variety of services to consumers where all both small and medium sized companies are presented in Canada. An overview of the National Bank of Canada is provided along with the main facts concerning its headquarters, the number of employees, and the revenues. Moreover, a SWOT analysis is given that includes the opportunities, threats, strengths, and weaknesses in a tabular form. Additionally, the VRIO analysis is also provided to indicate core competencies of the Bank.
SWOT Analysis of NBC based on assignment 1 & 2.
According to assignment one and two, the SWOT table above indicates the strengths, weaknesses, opportunities, and threats of NBC. The bank showed an excellent performance as per its strengths while competing with other financial institutions in Canada. However, it still has some weaknesses such as the weak national presence. The banking processes and technology are the key areas where the National Bank of Canada can generate its biggest gains through cost reduction and differentiation in its services. For instance, the NBC was the first financial institution to launch a new platform of mortgages that allows for one approval for over 75% applications. Therefore, this did not only provide the bank with an edge in a competitive market, but it lowered its costs thereby allowing it redeploy resources to some revenue generating operations.
Based on the above SWOT analysis, the National Bank of Canada remains the best key player in the economy of Canada. This because it is considered as one of the most active banks in Canada. Therefore, it is continuously performing strongly with healthy margins that are better than its competitors in the banking industry (Valores, 2016). The bank is rewarding its investors with steady growth and sustainable dividends. It is not exposed to the energy patch as other largest banks in Canada. Thus, it maintains a high quality service with a low-risk statement of financial position (balance sheet).
Generic strategies that NBC employ
Cost Reduction and Differentiation
According to the 2014 annual report, the NBC can make the leading gains in processes and technology by reducing its costs and differentiating its offerings to the customers. For instance, the NBC was the first bank to unveil the mortgage policy. The launch gave the bank a competitive edge in the market, and lowers the bank’s costs and diverted such costs to resources that can generate extra revenues.
Are we on the course? The NBC is investing to incorporate the mobile banking sector into its offering so that to provide the existing and new customers with a current channel for fulfilling some of their financial desires. Since this an exciting modern frontier, the National Bank is expecting to keep pace and should be at the front position in some areas. Moreover, the technology of the NBC is also aimed at safeguarding the information of the customers as well as increasing the data mining capabilities of the bank with the main objective of applying information to boost the experience of clients.
How do we get there? Investing in technology provides the bank's employees with adequate tools and relevant skills for increasing the operation efficiency of the bank. Consequently, the National Bank of Canada needs to create more opportunities while reducing its threats to bring the bank to an advanced level. While comparing the performance of the NBC with the existing competitors, a firm that is using differentiation strategy will incur extra costs regarding the expenditure on advertisement aimed at promoting a differentiated product image. However, such costs will be considered as investment costs for the NBC (Porter, 2008). When the bank differentiates its products and services, it will be able to charge a premium price for the similar products and services in the market.
The National Bank of Canada should stay on course and stick with their current strategy and strategic objectives because it will make good use of the strategy. Moreover, through differentiation, the NBC will experience better levels of its services, and performance of its products to the customers. However, some disadvantageous areas may include the difficulties especially on the part of the bank to estimate if the additional costs involved in differentiation can be recovered from the client through premium pricing methods. According to Johnson, the successful differentiation strategy of any company may attract other competitors to enter into the market segment and start copying the differentiated products (Johnson, Scholes & Whittington, 2002).
VRIO ANALYSIS
Financial performance
The high performance of NBC during the previous fiscal years reflects the bank's steady progress in the accomplishment of its strategic actions. More importantly, the results of the National Bank indicates that its persistent focus on the three most important priorities (People, risk management, and innovation and technology) is the winning tactic.
Diversification
This has been the key success particularly in the revenues within the bank's three segments (personal and commercial banking, management of wealth, and financial markets). Therefore, the NBC expects every sector to contribute to its financial results by focusing on the bank's efforts in areas of strength while seizing the best business opportunities. The bank will achieve this approach with the perspective of balanced growth.
Human Resource Management
As the use of technology transforms the financial services of NBC, it has believed that both motivated and knowledgeable employees are the best people to deliver a client experience. This may entail the provision of advice, responding to information requests, and transaction handling. Due to the above reason, the priority of the National Bank is to nurture the engagement of about 20,000 employees of the bank (Powers, 2015). Through the current training, effective leadership, and coaching, the bank is striving to create a workplace that is compelling in the sense that every worker should develop their full potential. According to the ranking of 2014, the National Bank of Canada is one of the best employers in Quebec, and Montreal, Canada. It is also the best-diversified institution concerning employment due to its strong endorsement of its efforts in Canada.
Wealth management
The organic growth and contribution from the acquisition that was completed at the beginning of FY 2014 led to the increase of net income by over thirty percent and sixteen percent of the total revenues for the management of wealth (2014 Annual Report, 2016). Consequently, the business operations of the bank derived almost 40% of the total revenues outside Quebec. This is growing across Canada through some differentiated multichannel strategies.
The Canadian network of investment team of NBC that is supported by the in-house experts also provides high network customers that are possessing a full range of wealth management services that is specialized to their wants based on unbiased advice. Moreover, the customer-centric focus of the bank is supported by its private division of wealth that is rapidly established by leadership positions in Quebec. Consequently, the bank is currently expanding the services to the selected marketplaces across Canada. The service is provided by efficient transactional platform through the direct brokerage branch of the National Bank.
Key success factors: Internal
Innovation and Technology
Firstly, technology is the mainstay of the National Bank of Canada, its broader financial activities, and other channels of electronic banking and the Canadian citizens. This implies that proper application of technology particularly the internet has offset the merits of the distribution network that is held by the key players in the banking industry in Canada. Secondly, the ability of the NBC to exploit the prevailing scale and infrastructure. That is since the bank is experiencing a high fixed cost in its sector, the new participants will be required to incur extra costs to exploit the current scale through the introduction of innovative products and services.
Reputation.
The NBC has been marking its services through some levels of physical locations. It also recognizes its products via massive advertisement to enter the market. Additionally, the location of the National Bank acts as a purpose of creating credibility. Therefore, this will offer a sense of security. Regarding the switching cost, NBC has a relatively small one, but its brand positioning needs to be compelling to overcome the switching inconveniences. The bank has also concentrated on the lower cost with improved efficiency techniques due to the growth in the banking segment, homogeneity, and overcapacity. Due to this, differentiation has been a success factor for the NBC and its business rivals such as the Citizen Bank have been competing continuously to acquire the market share. Bu the national bank has benefited from its reputation of reduced cost structures to enjoy the possibility of further merging.
External
Social Development
The National Bank of Canada is endlessly driving the social developments. That is, it is a committed elevation of entrepreneurship skills. For example, the bank provides support to many organizations and other initiatives. This assists it to forge stalemates between the private sectors and education. The bank is committed to the diversification of cultures and staunch supporter for the development of women. Therefore, the NBC is taking such initiatives since the integration of strangers in Canada is acquired not only through education but hard work. For this reason, over forty percent of the employees of the NBC are coming from different cultural communities, and as per the policy of the bank, it will proceed in championing for diversity over the coming years. The dimension of humankind will be the key differentiating factor in the banking sector especially in the context of changes in technology.
Meeting expectation of shareholders
As much as the NBC is focusing on creating the value for its owners, it is fulfilling the social-economic duty at a great objectivity. Therefore, its donations and sponsorships give significant support to other enterprises in areas of health, arts and culture, education, and the well-being of the society with the emphasis on youth initiatives. Moreover, the bank is encouraging entrepreneurship in the community within which it operates while being trusted as the only long-term financial partner of local firms.
References
2014 Annual Report. (2016). National Bank of Canada.
Johnson, G., Scholes, K., & Whittington, R. (2002). Exploring Corporate Strategy (7th ed.). Prentice Hall, Financial Times.
Porter, M. (2008). The five Forces that Shape Strategy. Harvard Business Review.
Powers, C. (2015). Six Success Factors Implementation Lessons from National Bank of Canada - ASUG News. Asugnews.com. Retrieved 16 June 2016, from http://www.asugnews.com/article/six-successfactors-implementation-lessons-from-national-bank-of-canada
Valores, C. (2016). National Bank of Canada: A Sharply Undervalued Contrarian Play On Canada. Seekingalpha.com. Retrieved 16 June 2016, from http://seekingalpha.com/article/3980261-national-bank-canada-sharply-undervalued-contrarian-play-canada
