National Australia Bank (A) Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Introduction:

National Australia Bank had known to be one of the biggest providers in terms of financial services in 2000 by market capitalization. The company came into existence in 1858 and treated as a giant in an Australian stock market. The company has nearly 23000 employees in Australia and approximately 47000 in other parts of the world. NAB was acknowledged as the largest provider of financial services to the small and medium business sector and the rural sector.

NAB had built its reputation as an outstanding Australian bank by having the lowest bad debts in the recession of the early 1990s, due to its centralized credit management bureau and its conservative nature. The case study of NAB is based on the business, and corporate strategy followed by NAB and the negative consequences of it.

Q1: What was National Bank’s strategy in 2000?

Answer:

In 2000, the primary strategy of the NAB was based on global expansion and transforming itself into a fully integrated financial services. In addition to this, the management at NAB initiates and accelerates growth and performance in its business operations, and that was solely based on maintaining relationships with NAB's stakeholders.

Another strategy of National Australia Bank was to fasten the growth of its selective profitable business divisions on a global basis. The management started controlling the business in a way that would create maximum value to the company’s existing and potential shareholders. Along with this, NAB was planning to build diversified income streams. For 2000, the major theme of the company was based on customer relationship management by using company’s cutting-edge customer relationship management system, technology, wealth management expertise, creating shareholder value, development of staff and initiating corporate social responsibility programs. The company aimed to give proper and more attention to the development needs of their personnel that in turn would help the bank in creating an organizational culture that was based more on innovation and flexibility.

Q2: Was it a winning one, given their environment and their existing capabilities?

Answer:

For a strategy to be winning, it is important for a company to identify the existing issues that need to be solved. The winning strategy needs to be based on strong facts and figures based on financial and non-financial measures along with customer and competitor analysis. National Bank’s strategy in 2000 was not the winning one because of several flaws and issues in different ways. In addition to this, holding a distinctive position in the industry is another way through which a company can generate its position in the market, however, the company failed to do so.

The banks have faced cracks in its global strategy due to the lack of fit for a company espousing global ambitions. NAB needed to make a major investment in the business in order to gain the scale required for retail and business banking operations in the U.S, but again the company was extremely unsuccessful in doing so. Moreover, the strategy used by the bank in 2000 was unsuccessful because it failed in terms of proper implementation and failed to deliver the initiatives. Furthermore, the HomeSide disaster and the sale of Michigan National were some of the facts that have proved the flaws and blunders in the strategy.

Q3: What went wrong, was it execution, poor reading of a changing environment, inappropriate systems or what?

Answer:

The strategy of the bank was based on giving greater attention to the development needs of their people along with fostering of a more flexible and innovative organizational culture however, various flaws have been identified in the execution, management and culture of the company. After the HomeSide disaster, various issues have been highlighted with respect to leadership, accountability, management process and culture at NAB. In addition to this, the acquisition of MLC was a wrong strategic move as the company had not done proper due to diligence before the acquisition.

Various consulting companies reported the acquisitions as a wrong decision, but the management first ignored and then responded angrily. Moreover, other serious questions with respect to the execution were lack in terms of risk management, management credibility and finally its ability to be taken seriously as a global player...........................

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