Essays on Expansion to Asia: The National Australian Bank Case Study

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The paper "Expansion to Asia: The National Australian Bank" is a perfect example of finance and accounting case study. National Australian Bank (NAB) is one of the leading financial institutions in Australia offering deposits, credit and foreign exchange services. In the recent past, the organization has found it increasingly difficult to meet the objectives of shareholders in a shrinking loan and credit portfolio both a home and in established markets of Europe and North America. The organization is facing a strategic issue of diversification into the populous and untapped Asian market especially China.

The expansion strategy into this region is the most challenging issue to corporate-level management. Peng and Wang (2008) observe that long-term intention of an organization is to drive business objectives and sustainably build competitive advantage. In the case study, NAB has to be patient in obtaining currency license, gaining acceptance by local customers and overcoming stringent regulatory limitations in the foreign market. In the event of expansion, the organization finds it challenging to develop and exploit of core competencies of Chinese workforce, build synergies through Joint venture and create value to the Chinese economy (Neha, 2013).

This report will establish how the National Bank of Australia needs to have an effective entry strategy into the Chinese market through strategy formulation and implementation. Issue Identification The issue identified in the case study is entry strategy and the associated cross-cultural differences which affect organizational culture and change management. The Austrade commissioner, Brent Stewart notes that China has stringent regulatory limitations coupled with the business environment and cultural challenges. However, there is a potential of NAB making great gains given several success stories of other Australian businesses such as The Woods International, Neuplex and MtM, an Australian Automotive manufacturer.

Cultural differences between nations are found in the level of values which is the deepest level. Bono and Heijden (2011) argue that values are less tangible than practices, hence cultural differences in an organization is identified in their levels of practices. A joint venture that is ethically driven allows the organization in the party to form a new subsidiary without altering the parent companies. They can access knowledge, funds and assets but profits are owned by the parent entities.

National Australian Bank has the opportunity of establishing a joint venture with a Chinese entity in the banking sector to make quick gains and expand its banking portfolio (Rugman, 2009). It is noted in the case that bridging cultural differences in China is not easy. It will be a tall order for NAB to consider a wholly-owned subsidiary or strategic alliances in a tough Chinese business environment with many stringent regulations. Critical Discussion Strategic management is critical in the event of market expansion and entry into foreign markets.

The move requires a deeper understanding of leadership and corporate governance, organization structural design, human resource capabilities and best management practices and systems. Diversification engenders a cultural mix and international understanding between countries (Bono & Heijden, 2011). In the case study, cultural differences between Australian and Chinese workforce has been highlighted as the major gap between strategy and performance of the NAB. Piepenburg (2011) agrees that Hostede explored six dimensions of national cultures; power distance, individualism versus collectivism, uncertainty avoidance index, masculinity versus femininity, indulgence versus restraint and long-term orientation.

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