The Growth of Citizens Bank through the Decades - Essay Example

Citizens bank analysis The growth of Citizens Bank through the decades has been based on specific strategic choices. Since its first establishment, in 1828, the company has highly emphasized on expansion as a tool for increasing its competitiveness. The incorporation of the firm in RBS in 1988 resulted to the increase of the funds available to Citizens Bank for expansion. Indeed, since 1988, the firm highly focused on acquisitions for achieving a rapid growth in the USA market. As Citizens Group was growing the need for securing the firm’s coherence was made clear. The introduction of Credo, a framework of the firm’s values and mission, in 2002, has highly supported the improvement of the firm’s relationships with its customers, its employees and the community. In 2004, the acquisition of Charter One, led the firm to the eighth position of the ten largest commercial banks in USA (case study, p.1). The above event, even it is quite positive for the organization, led to a critical strategic problem: would Credo, which had been proved quite effective, be able to respond to the needs of the organization, as it had been changed after the acquisition, in the future? How the organization would face this challenge, by updating Credo or by changing its leadership style? The strategic problem that the Citizens bank is facing is followed by an important tactical problem: up to then, in 2004, the organization has used acquisitions as a tool for promoting growth. Acquisitions, as developed through the years, led, necessarily, to the radical transformation of organizational structure: in 1992 the employees of the organization were estimated to just 1,300 while in 2004 the firm’s staff reached the ‘24,000 people across USA’ (case study, p.1). It was at this point that the tactic of the organization to proceed to acquisitions led to concerns. Larry Fish, the CEO of the firm identified the particular issue; it was clear that for the future the terms of acquisitions in which the organization would proceed should change. At the same time, Fish had to face another problem: Citizens Group was no more a bank of average size; it has become a major competitor in the US banking industry. Thus, the practices used up to then for securing the firm’s image in the market should be reviewed. It has become clear that the firm was facing a tactical problem: the rate of acquisitions of other banks/ financial institutions has become so rapid that the organization’s mission and values could be doubted, as of their feasibility. The firm’s CEO would have to resolve a series of issues related to the above practice. From 1992, up to the acquisition of Charter One, the organization’s growth has been gradual. Fish controlled the operations of the organization effectively using a mission statement that he had developed in 1992: focusing on customer, colleagues and community would be the organization’s core values (case study, p.2). In 2002 also, the Credo was introduced which, however, was based on the firm’s position in the market at that particular period of time. After the acquisition of Charter One, the content of the organization’s mission statement could not respond to the needs of the organization. The change of Credo would be considered as necessary. At the next level, up to 2004, when the acquisition of Charter One took place, three vice-chairmen supervised the activities of the organization nationwide. Since the acquisition of Charter One, the appointment of two additional vice-chairmen became necessary: these chairmen should supervise the Risk Management and the Midwest Banking sectors of the organization (case study p.2). The establishment of two additional positions of vice-chairmen for addressing organizational needs after the acquisition of Charter One would be characterized as non-sufficient. Since the change in the organization’s size, including of its branches and employees across USA, has been radical, more initiatives would be developed for ensuring the appropriate control on organization’s operations from 2004 onwards. Moreover, the relationship between the firm and its employees would be changed. The volume of work that has to be delivered daily has been significantly increased. Employees should be given incentives so that they remain motivated, a term which is valuable for ensuring the high quality of customer services. As Fish admitted, it would be quite difficult for him, to keep the relationship he had with the firm’s employees in the past; monitoring regularly employee performance and rewarding immediately significant employee initiatives had become impossible, a fact that would be examined when developing the firm’s new mission statement but also when updating the organization’s operational rules. Through the issues discussed above it is clear that the organization would promote appropriate strategies for resolving its problems, as resulted from change. At a first level, the update of Credo seems to be unavoidable. In fact, a new mission statement would be established, incorporating the values of Credo. The new mission statement should primarily focus on the following targets: organizational culture should become flexible allowing changes as the organization enters new markets; also, linking performance with rewarding would support employee motivation. Emphasis should be also given not just on customer services but also on customers’ expectations, in terms of benefits and profits. For this reason, the firm’s existing products would be reviewed becoming more competitive towards those of the other major competitors in the UK banking industry. Since the firm has now to face a strong competition, compared to its previous position, it has to alternate its operational practices accordingly. At the next level, the firm should alternate its structure. As noted in the case study, up to 2004, there were three vice-chairmen in Citizens Bank, supervising three different organizational sectors. The new needs of the organization after the acquisition of Charter One led to the establishment of two additional positions of chairmen, as explained earlier. However, no reference is made to the structure of the organization in regard to the lowers levels of the organizational hierarchy. Just the following facts are highlighted: the branches of the firm across the UK are organized locally (case study, p.6); this fact allowed the development of initiatives for meeting the demands of customers in each region. The above structure seems to be justified if referring to the firm’s prior market position. In the context of its new size, the organization’s structure should be alternated. A centralized structure should be preferred, so that the coherency of organizational culture, which would be changed as suggested earlier, to be secured. Otherwise, it would be quite difficult for the organization’s top management team to control organizational activities across UK, meaning whether these activities are aligned with the organization’s mission statement or not. The development of the practices suggested above would help the organization to compete effectively in the US banking industry. Still, the following issues should be taken into consideration: before 2004, the firm has invested significant amounts on marketing. For example, after acquiring Mellon, the organization used a budget of $30million for promoting its activities in the relevant market (case study, p.10). Also, the organization hired all employees of Mellon using the specific strategy as a fact for proving to local community its respect to ethics. However, this practice would be quite difficult to be applied in the case of Charter One. In fact, the organization should review all aspects of its tactic in acquiring organizations across USA. As also noted in the case study, the acquisition of Charter One could set ‘an integration challenge for Citizens Bank’ (case study, p.11). For this reason, it would be necessary for the organization to develop a series of measures ensuring that Charter One would not threaten organizational coherence. The change of mission statement and the changes of organizational structure, as suggested above, would be necessary parts of such initiative. Controlling costs in regard to all phases of acquisition but also later on, when promoting this initiative to the public of the relevant region, would be also important for avoiding treats against the organization’s financial stability. The change in the leadership style of the organization is not regarded as necessary, unless if the firm’s current CEO, L. Fish, thinks that he cannot respond to the challenges resulted because of the rapid change in the organization’s market position. Works Cited Lal, Rajiv, and Arar, Han. Citizens Bank. Harvard Business School, March 17, 2005 Read More