Australia and New Zealand Banking Group

Question: Write an essay on Australia and New Zealand Banking Group Limited. Answer: Australia and New Zealand Banking Group Limited (ANZ Bank) is one of the leading banks in the country, which is operating their business in the global market. The company has made good reputation across their customer base by providing best services and experience. The company is now interested to expand their business particularly in three countries which are France, Brazil and Korea (Piekkari, Welch and Welch 2014). All the targeted three countries belong to three different continents therefore different market is expected to respond to the expansion strategy. ANZ Bank is planning to expand their business in those markets by the help of acquisition or strategic partnership in the initial stage. The objective of this report is to analyze and, discuss the character of the three different markets. The formulation of strategy should be suitable for the local market that may not match with other country (Cavusgil et al. 2014). This report discusses about the potential problems of the market that are associated with the business and may influence the outcome. To invest in those market it is also important to understand the future market in those countries otherwise the business outcome will be negative. Cultural aspect also influences the business in the long term, which is also under the consideration of the report . After the discussion, suitable recommendations are given to implement the strategy of business expansion. Understanding market structure Market structure is dependent on the market condition, which is very important aspect of every business. Every company measures the level of competition before entering the market that helps to understand the volume of business and profitability. France French banking industry is saturated with lot of competitors who are operating their business in very low profit margin due to intense competition. Due to the intense competition in the market and most of the players are in the same category therefore France banking industry has perfectly competitive market structure (Jonsson and Foss 2011). In this type of market competitors, produce standardized product to their customer, which is more or less same in nature. Perfect competition market structure provides the ease of market entry and exit which is beneficial for the large organization (Piekkari, Welch and Welch 2014). There are several competitors in the French market like Cooperative Banks of France, which is the market leader and Defunct Bank of France also produce good business in this market (Gilbert, Rasche and Waddock 2011). Brazil Banco Bradesco Financiamentos, HSBC, Banco PanAmericano and Citibank are the major competitors in Brazil. The Brazil banking industry is facing deep recession for the last five years and several large organizations is withdrawing the business from the country (Rugman, Verbek and Nguyen 2011). The current market situation is associated with the lot of uncertainty and competition is not structure properly. Many banking corporation is facing problem to gain profit, which has changed the market character. The market structure in Brazil is oligopolistic competition where barrier to market entry and exit is also high. Korea Korean banking industry poses highly monopolistic market structure where many competitors are available but all of them provide different kind of products to their customer. Therefore, to compete in the Korean market, it is very important to introduce customized product for their customer. Korea Exchange, Hanvit Bank and Korea Housing Bank are the main market leader, which has almost 40% market share (Okoro 2012). Apart from that, several other national and regional banks are also operating their business in this market. Analysis of market size and profitability Market size and profitability is the primary focus of every business strategy because it provides the understanding the volume of the business for new entrants. To conduct the report, market size and profitability is discussed here. France The Banking market in France is quite big and many competitors operate with good volume of business. The total yearly volume of the business is near about 138 billion Euros. The last five years trend of French banking industry is good which shows a decent growth year after year, however 2014 has faced a negative growth due to international market (Kumar, Gaur and Pattnaik 2012). The average business in the banking sector is growing in a good pace and several international banking companies are entering the market because of the stable growth however, the profit margin is very low in this market due to perfect competition (Fdration Bancaire Franaise 2016). Brazil Brazilian market is highly vulnerable in terms of business volume however, the total market of the Brazilian banking industry is larger than France due to its business intensity, population and area. The total volume of business is expected near about 212.6 billion dollar in 2016 (Thomas White International 2016). Last five years trend of the Brazilian banking industry is also not good because it shows an unstructured growth. The market is highly influenced by the international market however; the profit margin is very high in this country. Most of the international banking corporation prefers Brazil for their business purpose because of the better profit margin (Chan, Finnegan and Sternquist 2011). The reason behind the more profit margins is the uncertainty of the market. The loan recovery rate is bad therefore, every ban charge higher rate of interest to the business organization. Korea Korean-banking industry is facing serious reforms in the recent time and the banking system is changing to bring the investment from outside. In spite of several problems in the national level, the banking sector in Korea has shown stable growth, which is the indicator of the stable business growth in the country. The average volume of business in this country is low however; the future scope of business is very high in this country. The number of competitors in this market is also low and the private sector banks are not having good strength due to the national policy of banking in the past (Kowalkowski, Kindstrm and Brehmer 2011). The profitability of the business is also high due to the monopolistic competition. If ANZ is able to introduce new products in this market then there is high chance to get good growth. Analysis of potential problem of each market Potential problem for establishing business in France is associated with the administrative department of the government that takes considerable time to provide permit. The government of France ranked 82nd in the world in terms of protecting foreign investors in terms of land acquisition and resolving insolvency. The tax rate of the government is also high that influence the profitability of the company. Since the rate of interest in the country is very low, therefore it is very difficult to start new business (Hashai 2011). The tax structure of France is also high therefore it is very difficult to operate business in high margin. In case of Brazil it is one of the liberated country for the business organization. The main problem of the country is the class between the local and national government, which take lot of time to proceed with the required permission along with the bureaucracy culture. Corruption is another potential problem for the foreign business organization in this country (Hutzschenreuter, Voll and Verbeke 2011). Local labour force belongs to the several unions therefore foreign investors have to continuously negotiate for the business growth. Brazil do not have good infrastructure therefore future business scope is less in this country however recently government has taken initiative to enhance the infrastructure development (Gabrielsson, Gabrielsson and Seppl 2012). The potential problem for business in Korea is associated with the bureaucratic culture of the government however; they are changing their views and encouraging foreign investors to establish their business in the country. In terms of business culture, the country has only one problem that is language otherwise Korean government is providing lot of benefit to the foreign investors (Solutions, 2016). The infrastructure of the country is very good and the labour force is also well educated that support the business. Analysis of future development Analyzing the current development of three countries, it can be said that Brazil has the highest scope to conduct more development in the country whereas France is already a developed country in terms of infrastructure development. Korea has also several aspects that can be developed in the country. The technology use is also good in Korea because several local companies are inventing new technology (Gabrielsson, Gabrielsson and Seppl 2012). The future business scope is best in Korea because the country has already good infrastructure and low corruption. The government of Korea also provide good land acquisition policy that help foreign investors. On the other hand, Brazil also has the opportunity to develop the country but the corruption of the country is slowing down the process. If Brazil implements foreign investment in their infrastructure development then ANZ bank will have lot of scope to increase their business (Buckley 2014). The Banking business is also good in this country because many local bank is operating their business therefore acquisition of such bank will help to get the initial infrastructure for the business (Hutzschenreuter, Voll and Verbeke 2011). If we consider the future business in France then it is weaker than Brazil and Korea. The scope of investment is less in this country however retail sector of the country also provide lot of opportunity for the banking sector. The volume business in future is less in France because of low infrastructure development investment (Rasche 2011). Impact of foreign exchange The impact of foreign exchange in the business is high due to the rate difference of several countries (Hutzschenreuter, Voll and Verbeke 2011). Operating business in such a country is beneficial for the investor because it will mark positive impact on the exchange of the foreign money to the business. According to the foreign exchange rate and policy, France is the suitable option for the banking investment because the foreign exchange rate is low for the foreign investors (Douglas and Craig 2011). The Stability of the business also depends on the foreign exchange because it helps in import and export of goods. In case of Brazil and Korea their currency rate is low therefore their foreign exchange rate is high which cost more to the exporting and importing of goods. However, Korea is still better for the business in terms of foreign exchange ratio whereas Brazil take lot of tax in this segment (Dhaliwal et al. 2012). In case of banking operation higher ratio of foreign exchange will gain more profit that is beneficial for ANZ bank. Impact of cultural aspect for market entry Every market has different characteristics that impose lot of influence to the business. When any foreign company establishes their business in different country then they face cultural difference first. The cultural difference is not only associated with the social factor however it also includes the national policy of the government to establish the business. The cultural aspect is mainly associated with the social culture of the country (Luo and Shenkar 2011). In case of France the cultural aspect of the business is associated the development of the economy. The country is among one of the most modern country that provide skilled labour support to the business organization (Piekkari, Welch and Welch 2014). The government of the country also supports foreign investment to improve the business standard. Therefore, investment in this country will be profitable in spite of low profit margin because low profit margin will be compensated by volume of business. In case of Brazil, the business culture is also good however, the economic stability of the country is low due to several reforms in the country (Rugman, Verbek and Nguyen 2011). The volume of the business may be low in this country but the margin of profit is very high that can compensate the business. The availability of the skilled labour is less as compared to France but the government also allows foreign workforce for the foreign investors (Hutzschenreuter, Voll and Verbeke 2011). Therefore, it also becomes profitable for the ANZ bank to establish their business in Brazil. Korea has one of the strongest economies in the Asia pacific region because their government is allowing the foreign investor in recent time. The growth of the business is the highest in the continent. The nation labour of the country is country is well skilled and educated to support the business (Luo and Shenkar 2011). According to the measures of market entry France has the suitable options for the foreign investors whereas Brazil and Korea is still introvert as compared to France. Conclusion From the above report, it can be summarized that the international business opportunity in France, Brazil and Korea is good that provide lot of flexibility to the banking business. The cultural aspect of three countries is positive however, difference in the local skilled labour will make a difference to the business. Most importantly, the policy of the governments in Korea and Brazil is comparatively lesser than France. The infrastructure of France is already developed whereas Korea and Brazil has lot of scope to develop their infrastructure with the help of banking investment. Most importantly Brazil and Korea banking industry is associated with lot of local players, therefore it is easier to acquire other companies with their development in the business. In France, most of the companies are large organization and the local banks do not have the infrastructure to develop their business. Therefore, it is difficult to acquire other companies in France however; strategic alliance is t he best option to establish business in France. Last five year data of the banking sector in three countries is also associated with good growth therefore the trend of the business is suggesting to acquire or merge other organization to establish their business. Recommendations Adoption of Different Culture: ANZ Bank has top adopt different cultures to establish business in other countries. The company also need to adhere to the government policy because the financial market system of different country is different. Building of Strategic Alliance: Company should establish their business first in France through strategic alliance because acquisition cost high. With the help of strategic alliance company can get a customer base and the existing business. Evaluation of Business Scope: ANZ has to evaluate the business scope in Brazil to find out the situation of the business. The company should step very carefully due to the problem of workers union. Company should hire skilled labour to operate business in Brazil. Business Expansion to Korea: Korea is the best place to expand the business because it has the infrastructure and the government is encouraging investors. Due to many local players in the country, ANZ bank should acquire other company to establish their business. Reference List Buckley, P.J., 2014. International integration and coordination in the global factory. InThe Multinational Enterprise and the Emergence of the Global Factory(pp. 3-19). Palgrave Macmillan UK. 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