Strategy of International Expansion ANZ Bank - Myassignmenthelp.Com

Question: Discuss about the Strategy of International Expansion ANZ Bank. Answer: Introduction Australia and New Zealand Banking Group Limited has secured the third position in the banking industry of Australia (www.anz.com.au). It deals with commercial and retail banking service and has its branch in other countries. The aggressive expansion of the bank in the market of certain Asian countries like India and Japan has attracted the eyes of various investors and the company has taken various strategy formulations like modification of e-banking system and procedural effectiveness in case of insurance for global expansion. The bank is maintaining a strategic alliance in the Asian markets and providing all the possible technical assistance for assessing the risk management (Murray et al. 2014). Besides the large foreign sectors, the bank is also concentrating on the small business entities. The strategic structure of the bank to sell its products or providing services to the international markets is quite well planned. However, the company is under the pressure of integrating the ir global operations to comply with laws, and policies lay down by international organisations like the World Bank. The need to provide uniform high standard services to customers all across the globe has also led this MNC bank to integrate its global operations. Considering this system, the bank has maintained similar and uniform strategies in the Asian countries. Additionally, there are certain problems that the banks have to face in international markets comparing to the domestic markets. The marketing standard is quite unstable and future of the banks in the international market is quite unpredictable in nature. Therefore, reputed banking corporations like ANZ Corporation has to chalk out proper plan to continue its business to reduce the market risks. In this case, it has been observed that the bank is planning to expand their business in the countries like France, Brazil and Korea and the bank is required to assess the marketing structure and size estimation of these countries . The bank also needs to examine all the potential problems of these markets and define the cultural aspects that may affect the market entry policies of the bank. Discussion Structural difference The objective of ANZ Corporation is to create its influence on the European market including France by generating customer friendly schemes and provide guarantees of the financial independence (www.anz.com.au). The plan of the bank should be long-term in nature and the bank has to develop a uniform strategy for the European market. However, the proposed countries are France, Brazil and Korea and in this case, the bank is required to analyse the different marketing structure of these countries (Mahmoud et al. 2016). The environment of business structure in France is quite friendly and favourable. However, there are certain cultural differences and legislative instructions imposed on the international financial institutions. The conventional circulation outlets of France are being interrupted by modern players and the banking system of France is advanced to the level of digital economy (Peppard and Ward 2016). Revolution in the French banking system has been observed since 1980 and has created implications on the integration process. It has been observed that the French banks are providing incentives to the non-financial agents and states play important role to manage the functioning of banking system. The economical position of France is high and privatisation of banks has enabled more flow of financial capital into the country thus, strengthening it (Hanafizadeh, Keating and Khedmatgozar 2014). Unlike France, Brazil is a developing country and therefore, has its own banking and financial structure. It is important to make a developed personal relationship with the country. Brazil is the largest South American country and follows the structure of free market economy. However, the banking industry and economical out-base of the country is mostly depending on the modern technology and the market structure of Brazil is capitalist in nature (Barros and Wanke 2014). However, a large unemployment scale can observe in Brazil recently. Korea is divided into two portions and in this paper; the financial market of South Korea is being discussed. South Korea is experiencing a downtown in case of financial business and the financial system of the country got crushed. The banking system of this country is not that much competitive. Most of the banking loans and bonds are intend to cover short-term borrowings and the accounting management is opaque in nature (Ettredge, Xu and Yi 2014). However, the Korean government has taken many effective steps for the betterment of the financial and marketing system of the country. Like France, the Korean financial system is privatized and in the absence of any proper planning, the Korean banks are facing downturn (Garcia 2016). It has observed that all the three countries have their own and different marketing criteria and have been trying to establish their financial system on the hard base. The financial system of France and Brazil are quite stable and developed. The economic growth is attractive and many investors engaged their money due to financial security (Martins, Oliveira and Popovi? 2014). On the other hand, in case of Korea, the back bone of the financial system is weak and there is no uniform banking code. The financial market is hampered by the laxity of structural reform.However, the government of that country is trying their best to bring a financial revolution for improvement of industrial and financial system of the country. Estimation of potential size and profitability The ANZ Banking Corporation is intending to promote certain banking related brands in the markets of Brazil, France and South Korea. In this case, a final assessment of the markets of this country is required. The chosen banking products are loans and bonds, hedging solution, online foreign exchange dealings which the bank decides to provide in these countries. The potential size of France is quite attractive as this country has secured its place in the European financial market and as per the data of 2016; it is the third largest economy in Europe. The industrial framework of this country has helped to contribute enough for the development of economy. The GDP growth of the country has been risen gradually and the marginal acceleration of the country regarding economical growth has been increased 0.1% in 2016 compare to 2015. The future demand in the banking sector is high in France and the tax credits and investment prospects are well developed (Petria, Capraru and Ihnatov 2015). Henceforth, it is obvious to state that there are sheer chances of profits in the market of France (Borio, Gambacorta and Hofmann 2017). Like France, the economy of Brazil is also high and the country is considered as the ninth largest economy of the world. Due to the mixed economic system, the banking and financial sector of Brazil has secured a profitable and stable place (Schaeck and Cihk 2014). It has been observed that the economic transformation of Brazil has helped to bring a sustainable growth in the economic and financial market and therefore, Brazil is quite a good option for the international banks to establish their branches. The market size of the Brazil is also quite good. South Korea is an Asian country and also follows the mixed economical system. The Korean economy has faced lots of financial crisis (Lee, Song and Kwak 2014). However, the policies taken by the South Korean government are quite good in nature and helped to bring a change in the financial market of the country. The developing nature of the country has opened certain horizontal situation for the international banks and there is a possibility for the extra profits thereby. Potential problems There is no doubt that investment in international markets is quite risky compare to the domestic market due to its instability. There are certain other problems positioned in case of international market. It is not possible for the banking and the financial sectors to predict the future profitability of the banks or branches of the banks in the international countries. A bank is required to examine all the potential problems and market analysis of the proposed countries for avoiding future risks. ANZ is an Australian bank and wants to provide certain banking services to countries like France, Brazil and Korea. However, every bank has to face certain common dilemmas in case of international expansions and that can be categorised as follows: Every bank wants to earn certain profits from the international market and establish their portraits on global base. However, profit making strategies are not always successful. Therefore, there is a chance for the bank or institution to face huge loss and could not make enough resource for its shareholders. It is hard to meet all the demands of the international customers and there is a possibility to thorough degradation in the financial sectors. The modern banking sectors are wholly based on technology and a disruption of conventional banking system has been deteriorated. The cultural differences are also affecting the profitable character of the banks. International banks like ANZ are facing serious problems for establishing uniform regulatory system in every country and stable profits are become impossible for the banks. France and Brazil are stronger than the condition of Korea financially; therefore, the bank has to take different marketing strategy for Korea. Future Developments Brazil There is a huge scope for future developments of the Brazilian market. Brazil is one of the few countries that have been suffering from recession still now as they have been struggling to meet the demands of the modern economic market. International Monitory Fund has predicted that the country will experience a very slow growth amongst all the other developing economies (Garcia 2016). The inflation rate of the mentioned South American country is too much high and the huge deficit in the budget of the country has been one of the main reasons behind the bad economic condition of the country. However the most important thing about the economy of Brazil is its capability to move through extreme conditions in a very short period of time. However the management of ANZ bank has predicted that the banking industry will see a rapid change in the market after the implementation of some latest Banking Practices; Customization of Currencies Social Media Banking Mobile Wallets/Mobile Banking. South Korea South Korea on the other hand is a well developed economy and its economic condition is in sharp contrast with the developing economies. However the country has also its own set of problems which tends to disrupt its banking structure. Banking is becoming increasingly less personal and customers have been adapting themselves in exactly the same way that the banks want them to be. A market survey conducted by the management team of ANZ bank has revealed that the bank branches have been disappearing each and every day, paving the way for mobile banking experience (Garcia 2016). South Korea leads the pack of Asian giants when it comes to the highest internet penetration and it is no strange that people there are over dependent on the internet for availing the banking services. Social media also plays a great role as people are regularly updated about new products and other features that are provided by the banks. The management of ANZ Bank has predicted a digital banking structure in th e country in the coming future. France France is one of the most sought after countries for international investment. Most of the top bodies of the world as well as for Europe has their headquarters located in the mentioned country. The amount of opportunities that they provide to the investors has helped the French Market to be one of the most competitive as well as the best in Europe. This hhas been possible just because of the presence of; Research and Development Sectors Financial Sectors Production Sectors Start Up initiatives ANZ Bank has recently commenced operations in the country from their solo branch located in Paris. According to the management of the company, Banks in France are today facing rapid and irreversible changes across technologies, customer behavior and regulation. This results into the industrys current shape and has ensured the longevity and sustainability of the operating models of the banks in the country. Consideration of Foreign Exchange and Trade Implication Foreign Exchange helps to identify the process of converting the domestic currency into International banknotes at some particular exchange rates. These transactions present distinct ramifications for the global economy. The rates offered in foreign exchange affect the international trade, capital flows and political statement (Pietrobelli Puppato 2016). ANZ Bank is a regulator of Foreign exchange currency and has a contract with different organizations or the government of the respective currencies to issue foreign exchange currencies. ANZ Bank generally set exchange rates for a future date, exporters, importers and the investors to hedge the foreign currency cash flows. The management of the bank usually fixes the foreign exchange contract for a fixed term, for a fixed delivery date or for both but with an additional optional delivery period. The company also engages itself in deciding spot foreign exchange rates at the time when the delivery date is close to just two clear busines s days after the date the rate is quoted (Finkel 2015). Cultural Aspects Impacting Entry The number of companies that operate internationally has been on a rise. The globe is opening up for new foreign firms and new business opportunities are growing. The high competitive market in almost every country especially in the markets of the developing economies has made it even much tougher for the companies to maintain their stability (Finkel 2015). However the firms have accepted the challenge and are constantly innovating new forms of strategies that help them to have an advantage in the market. ANZ Bank is also no different as the recent opening of their Paris branch marks the 34th area of their operations globally. One of the officers of the following bank explains that it is one of the most difficult jobs to enter an unknown market and quickly getting accustomed to its style, culture and other related factors for performing the operations of the business in a smooth manner. As mentioned earlier the bank has been expanding slowly globally and thus they have to face a numb er of new obstacles among which culture stands out to be the main hindrance to the company. Culture can influence the company in many ways (Holmes et al. 2016). Language problems, pricing difficulties and cultural collisions are quite common in the beginning stages (King 2016). ANZ Bank appoints local management teams in each of the countries to make sure that they face no problems while carrying out its operations. The local regulatory bodies of the bank trains the employees according to the cultural aspects of the country where they operate and must be extra cautious to fit into the cultural methods like the quality of service that the customers like, their demands, any special demands and other such related aspects. The cultural aspect in Brazil is vastly different from those in South Korea and France. The people in Brazil are totally new to mobile banking and thus the bank has to wait for some time (Pietrobelli and Puppato 2016). As the people are not used to foreign culture it is important for the management to provide the time. On the other hand South Korea being a developed country, the customers expects everything to be in time and thus ANZ Bank must act promptly to serve the customers in a proper manner. The bank has to go through the initial difficulties to adapt to the culture of the international countries. Some of the main cultural aspects of different countries that the organization has to be aware are; Shaking Hands- There is a tradition of shaking hands with the customers of the banks in many countries whereas there are countries where people do not like shaking hands as it stands against their culture to do so. The employees of the bank must be careful while formally interacting with the customers in different countries. Use of Surnames- There are countries where use of surnames is acceptable. On the other hand in countries like Brazil the use of first name is more preferable. Whereas in the other countries like France and South Korea there is a preference for the use of surnames. Exchange of Business Cards- The issue of business cards is the same in all the mentioned countries. The management of ANZ Bank believes the business cards to be one of the most essential components of business (Pietrobelli and Puppato 2016). These are to be exchanged only at the first meeting itself so that each person can know each other the cards must be in public display so that one can easily learn the name of the other person while negotiating. Translations- Each of the offices of ANZ bank located overseas must have translators to make sure that they do not face any problem while interacting with people in their mother tongue. Conclusion The assignment has been successful in determining the different elements of the market entry with new products. The researcher has taken the help of different elements like the predicted developments in the future, market growth rate and other important specifications that has been helpful to make the project attain a concrete role. There are certain key points that ANZ Bank must keep in mind before entering in new markets. Some of them are; The timing of entry into the markets The type of markets that they enter The type of products that the company chooses Mode of Entry in the market The decision categories comprises of a number of different elements. The products that are to be introduced in the market by ANZ needs to be carefully assessed and formulated according to the necessary specifications of each of the countries where the company wishes to establish it. 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