Practical Guide to Company Management - Case Study Example

HANDELSBANKEN Student’s Name: Course: Tutor: University: City: Date: Handelsbanken Introduction There are many internationally recognized banks with high profitability levels. These banks achieved this by way of instituting proper strategies that saw to it the actualization of their set goals (Kalafatis, Tsogas and Blankson, 2000 p.416-437). These highly recognized banks have such interesting strategies and policies that are their trademarks. One such highly renowned bank is the Handelsbanken bank. This is a Sweden based bank (The History of Handelsbanken, 2012 p.3-4) that has over the years surprised many with its tremendous performance and resilience in the ever changing global market. This report, therefore, is dedicated to outline the bank’s success factors that include its culture and how it is kept alive, its entry models to the foreign markets, and the steps it took to avert the global-local dilemma. Bank’s culture Handelsbanken is known for its unusual culture that makes it stand out from other international banks. By stipulating its culture, the bank refers to way it carries out its operations. This fits with the description of culture in Chapter 6 by way of being part of the strategic choices made by the company (Johnson et al, 2017 p.164). The bank is driven by the need to outcompete its competitors and this is a culture that is instilled into the bank’s employees throughout generations. The attractive bit of the bank’s culture is the nature by which it drives the employees to be creative in the manner that they offer services to the customers. Among the bank’s renowned culture are decentralization, cost-consciousness and the ‘conviction that a company that wants to outperform its competitors must be different from mainstream’ (Brunninge, 2016 p.671). In decentralization, the company has gone out of its way to use oversees correspondent banks, small competitors and indebted companies to serve its customers oversees (2016 p.671-672). These mergers are managed by different managers and the highly decentralized organizational structures signify the importance of competition in the company as the small branches are evaluated and ranked according to their net income and percentage profits acquired annually. The decentralized nature of the company offers a competitive advantage in the form of major outlets from which the bank has maximized its profits and proceeds. The decentralization of the company activities saves the company time in the procurement process and in providing timely decision making process that does not involve the consultation of the central headquarters that would otherwise be flooded with request awaiting confirmation. Also, the use of the small competitors works to eliminate unnecessary competition and this puts the company as a monopoly by design and only leaves the major competitors that can easily act as a gauge of the company’s performance by way of making performance comparison in the departments of interest. The other culture specific to the bank is cost-consciousness. This refers to being aware of how much money one spends in the course of their operation (Clough, Sears and Keoki, 2015 p.36). The bank under the management of Jan Wallander significantly reduced the unnecessary expenses that were not directly liked to processes that were designed to attain customer satisfaction. This involved the scrapping off of some of the bank’s tradition such as the celebrated anniversary to help maximize its resources; time and cost to achieve customer satisfaction. This is a competitive advantage as the bank dedicated most of its resources to customer satisfaction and profitable investment options which significantly increased its profit. The other culture that is specific to the bank is its uniqueness that makes it stand out from its competitors. This is by way of using unconventional and uncommon strategies that distinguishes the bank from its competitors. The history of the bank was essential to the path development that has instituted quality policies that are still being used by the bank today. One such unconventional strategy is as stipulated in the policy of not changing its name even in the event of merger and acquisition (2016 p.672). This helps in retaining customer number as they cannot easily get confused by the frequent change in the bank’s name as is seen in their competitors. This policy works to stabilize the company’s profit margins as the number of customers does not fluctuate downstream but keeps increasing. Finally, the conviction that a company that wants to out-perform its competitors must be different from the mainstream is one of the ways that the company’s culture is spread and kept alive (2016 p.672). This helps the employees to always focus on originality in their execution of tasks and hence maintain the bank’s uniqueness that gives it an advantage over the competitors because of its consistency in its proceeds. The other way the company’s culture is spread and kept alive is by use of managerial figure heads who foster the growth and continuity of the banks’ culture (2016 p.673-677). This helps to spread the culture to new employees and regimes that see to it the company’s traditions are kept intact. Also, the company has an employee reward system that rewards employees who device cost-efficient solution and help save money for the company’s retirement plan (2016 p.672). This motivates the employees to strive and uphold the company’s culture and hence help to keep the culture alive. Entry models to foreign markets As Handelsbanken moved into the international market, its first entry model involved the use of a consortium of other Scandinavian banks (2016 p.673). This strategy was designed to help reduce the cost of exploring newer markets by way of cost sharing the expenses with other banks. This helped Handelsbanken to remain cost-conscious as it proceeded to expand into newer markets. Also, the strategy was a means to help the banks learn more about the international market. This would help them acquire the knowledge of the proceeds involved in international markets and how best to take advance of these new foreign markets so as to maximize on profit generation. When the consortium with other banks proved unproductive, Handelsbanken resulted to using its own representative offices to foster entry into the foreign markets (2016 p.673). At this point, the company was at the second phase of the process involved in strategic drift (Johnson et al 2017 p.181-182). This was because the business environment was changing fast with banks making a rush to join the international market and Handelsbanken’s change in strategy was done so as to help it be at per with the market changes. The use of its own representative offices enabled the bank to proceed with extreme moderation and in its own pace that saw to the great profitability of the bank when the Sweden financial crisis of 1990 struck and the over ambitious banks collapse and some went bankrupt as a result of indulging in risking activities such as investing is huge real estate deals that proved unproductive after the real estate prices were readjusted and in the face of the depreciation of the Swedish currency in 1992 (2016 p.674). Also, the bank avoided the acquisition of local banks as they could not guarantee the continuation of the bank’s culture (2016 p.676-677). The bank shunned away from making major acquisitions. This helped the bank remain focused on its own goals. This move was used to avoid the burden that results from acquisition as small banks would then rely on Handelsbanken to alleviate its bad debts and provide the capital needed to pursue their own interests. By avoiding these situations, the bank was able to concentrate on its own advances and on the culture that had been successful in driving the bank to achieve high profits. Handelsbanken culture was the restricting force that guided the bank’s advance into the foreign markets. Its culture of being different from the conventional banking systems enabled it to shun the consortium that almost all banks of Sweden had been involved in. This move enabled it to make conscious decision that positively impacted on its advance into foreign markets. Also, its cost-conscious nature was the force that saw to it that the bank did not invest carelessly in the developing real estate market and into other risky investment options. This prevented the bank from suffering the same consequences as did the other banks in Sweden in light of its financial crisis (2016 p.674). The decentralization policy adopted by the bank allowed for fast acquisition of monopoly powers in the foreign markets and later the fast growth of these representative offices into profitable branches (2016 p.674). If the bank had a different a culture, it probably would have suffered adversely in the Swedish financial crisis. This because a different culture would have probably driven the bank to behave like its peers and hence result in extreme devastation as investment options fail to pay up and result in bankruptcy and eventual closure of the bank. Also, being driven by different cultures, the bank’s representative offices would have failed to thrive and result in big losses by the bank. An unproductive culture would have led the bank into a series of scandals that would have affected the bank’s reputation and result in customer loss and the eventual decrease in the bank’s profitability (Johnson et al 2017 p.162). Global-local dilemma Handelsbanken has made tremendous efforts in trying to satisfactorily handle the global-local dilemma. This is first by instituting a concrete culture that remains unchangeable even as the organization explores newer markets and engage in acquisitions. This helps the organization to remain steadfast to its set goals and objectives. Its decentralization policy is one of the best strategies that has seen to the localization of authority and decision making Pride, (Hughes and Kapoor 2009 p.195-196) hence helping the bank to quickly further its advance in ending the global-local dilemma. The cost-conscious initiative greatly helped the organization to save some money that could be used in other activities and mostly in profitable investment plans. Secondly, the refusal by the bank to acquire local banks in foreign lands has helped the bank make huge milestones in averting the global-local dilemma. This is by way of ensuring that the bank has its own representative offices that ensure that its independence is retained throughout generations. This independence grants the bank the opportunity to engage in activities that best suits its interest and does not subject the bank to exploitation and use in furthering other banks’ interests. Thirdly, the Handelsbanken traded carefully in the global market and its decentralization helped it make clear boundaries of what is to be done locally and what is to be done on a global scale (2016 p.678). This enabled it to avert risky businesses and hence avoid the consequential losses that would affect its progress both locally and internationally. This has helped the bank retain good returns to sale and hence remain historically among the most profitable organizations in the world. The bank engages in different stands both in the local sand global market (2016 p.678). In the local market, the bank targets a mass-market. This kind of initiative invites all sorts of customers to use the services offered by the bank. This is because of the quality research study of the market conducted by the bank that gives it an understanding of its market and hence enables it to avoid any risky businesses while still remaining open to most people. In the global market, however, the bank singlehandedly hand picks the customers to use its services. This includes extending invitations to the big companies and wealthy individuals to invest in the bank and use their services. This is done deliberately as a means to help the bank avert risky ventures and make the most profit out of these highly profitable organizations and wealthy individuals. This practice ensures the continued profitability of the bank as it engages different organizations and customers at both the local and global markets. How Handelsbanken keeps its culture alive As mentioned earlier, Handelsbaken keeps its culture alive by way of executing its strategic management plans. For starters, the bank uses its own representative offices in the new markets. This averts the use of local banks that have their own cultures. It works to ensures that the culture uphold by the bank is carried forward to the further branches. Secondly, the bank employs new managers who have no problem with the kind of culture it uses as a basis of its operation. This is done by carefully selecting former employees of other banks who are tired of the tedious and long procedures involved in the proceeds of a centralized bank. This ensures that their culture of cost-conscious and decentralization is carried on into newer branches and hence kept alive in the day-to-day activities of the bank. Thirdly, the bank has instituted reward system for its employees who best showcase the ability to work with clear reverences to the bank’s culture. This works as a motivation for the employees to uphold the bank’s culture. The returns from the savings received following a cost-efficient solution is dedicated to the pension plan of the bank’s employees where all employees are given the same amount in order to encourage equality in the bank. Finally, the bank has instituted a motto of a kind that drives the employees to uphold the bank’s culture. This motivation is derived from the company’s appraised ‘conviction that a company that wants to outperform its competition must be different from the end stream’ (2016 p.671).p Recommendation The cost-conscious and decentralization culture of the bank should be kept alive in further expansion by way of the bank sticking to its gun. This implies that the bank should not change its strategies that it has been using in ensuring that its culture is kept alive. Secondly, the bank can institute a code of conduct that mentions its cultures as the main principles that govern its operations. This will work to ensure that every employee is aware of the cultures to uphold and hence avert any form of challenge directed to its basis of decentralized operation. This will help keep the culture alive during further expansion. Finally, the bank can also put in place control mechanisms that act as a way of evaluating the effectiveness of its culture. This could include internal as well as the external reviews conducted by a group of specialists who then report back on their finds. These controls will help keep its employee in check and ensure that, with or without employee reward systems, its proposed cultures are adhered to. Also, reviews are a good way of acquiring second opinion on the effectiveness of the bank’s culture and the suggestions provided in the reports following the reviews, will go a long way to ensure that the bank is the best in what it does. This maneuver will help keep the bank’s culture alive even in further expansion. Conclusion In a nutshell, the Handelsbanken bank is a reputable organization that has retained its tremendous profitability levels in the international market by way of having concrete cultures that governs all of its operation. These include decentralization and cost-consciousness that sees to it speedy decision making and cost effective operations. The organization keeps this culture alive by way of instituting in all of its employees a ‘conviction that a company that wants to outperform its competition must be different from the end stream’, by using its own representative offices in the new markets, by employing new managers who have no problem with the kind of culture it uses as a basis of its operation, and finally by instituting a reward system for its employees who best showcase the ability to work with clear reverences to the bank’s culture. In order to keep its culture alive even in the future expansion of the organization, the bank should keep executing its current strategies used to ensure that its culture is kept alive. The bank could also institute a code of conduct that mentions its culture as its operations guiding principle and control mechanisms such as the use of reviews to evaluate its performance to ensure that it continues to keep its culture alive in the future. References Brunninge, O 2016 Handelsbanken: Banking Done Differently, Sweden: Jonkoping International Business School. Clough, R H, Sears, A. G. and Keoki, S S 2015 Construction Contracting: A Practical Guide to Company Management, 8th Edition, New Jersey: John Wiley & Sons, Inc. Johnson, G, Whittington, R, Scholes, K, Angwin, D and Regner, P 2017 Exploring Strategy: Text and Cases, 11th Edition, Harlow, UK: Pearson Education Limited. Kalafatis, P S, Tsogas, H M and Blankson, C 2002 ‘Positioning Strategies in Business Market’, Journal of Business & Industrial Marketing, Vol. 15 Iss 6 pp. 416-437. Pride, W, Hughes, R. and Kapoor, J 2009 Business, Mason, US: South-Western Cengage Learning The History of Handelsbanken 2012 [online]. Available in www.handelsbankshistorien.nu/Global/Dokument/historik_fran_shb/10299_Handelsbankens_historia_oct2012_ENG.pdf [17 Aug 2017]. Read More