Individual Supporting Contributions to Group Presentation on Rabobank - Assignment Example

INDIVIDUAL SUPPORTING CONTRIBUTIONS TO GROUP PRESENTATION ON RABOBANK + Submitted Executive Summary According to SWOT analysis, Rabobank leads in marketing in Netherlands and in strengthening the operations of non-Dutch people. It also the leading bank in the world in terms of agriculture and food. It has a liquidity position and strong capital to cushion insolvency problems (Van 2012, pg 78). Therefore Rabobank Group has the following strategic capabilities: It has a market leadership position in financing the agricultural sector of Dutch and maintains and gains a market share of eighty five percent at the end of budget year for example in 2012.The bank also has a global leadership focusing on agriculture and food. Worldwide Rabobank is the leading supporter of agriculture and food with over five hundred and ninety three international offices in thirty countries. The bank leads with eighty-five percent shares in food and agriculture in Netherlands. In terms of liquidity and capital, the bank position has remained strong for the past five years. In 2012 financial year, Rabobank core tier 1 capital and Tier 1 capital increased slightly in comparison to financial year 2008. A Critical Discussion of Strategic Models and Areas of Study 1. Critical discussion of how the organizational structure, processes and relationship should interact to ensure strategic success. Notionally, the structural design in a company refers to the responsibilities, formal roles and methods of reporting. Structural design influences the sources of a firm advantage in regards to knowledge management. Failure to change the structures can lead to serious undermining of strategy implementation. Good structures are not sufficient for success. In regards to the current structure of Rabobank, it is believed to be a matrix structure. A matrix structure consists of structure that take geographical divisions and form of product or divisional and structural structures operating in cycle. The divisions of Rabobank group are different with sovereign decision being made by their own panel of directors. Branches are different in types of produce, services offered, and the market to provide these services and product. Organizational units in different branches provide services and product that deals with mortgages, asset management, equity participation, investment banking, loans and saving and leasing ( Clay 2007, pg 38). Every organizational unit has a management team that is responsible for budget in areas of their operations such as exploitative innovations and pursuing exploratory. In addition, organizational units in each branch operate in trade with different levels of competitiveness and environmental dynamism a state necessary to observe units pursue different new activities. There are several advantages of matrix structure. They are helpful in knowledge management since they permit different areas of knowledge to be used across the company lines. However, matrix structure fails to cover the large global companies and therefore Transitional Structure is proposed for use in Rabobank Group. Transitional structure is a way of international management that is quiet effective in making use of knowledge across borders. The aim of the transitional structure is to get the two best international strategies that include global strategy and multi domestic strategy. A global strategy deals with divisions of global product (Harzing 2012, pg 23). The transitional structure also tries to get high global coordination and high local responsiveness. The branches of the Rabobank Group are geographically distinct, autonomous decision entities with their own board of directors. Branches have autonomy with respect to types of products and services offered and markets within which to provide these products and services. Organizational units in these branches provide products and services that cover asset management, mortgages, loans and savings, insurance, leasing, equity participation, corporate banking, and investment banking. Each organizational unit has its own management team with budget responsibilities regarding several aspects of their operations such as pursuing exploratory and exploitative innovations. Moreover, organizational units within branches operate in markets with varying levels of environmental dynamism and competitiveness – a condition required to observe units pursuing different innovative activities. Matrix structures have several advantages. They are effective at knowledge management because they allow separate areas of knowledge to be integrated across organizational boundaries. However, Matrix Structure does not fit large global companies and therefore, we proposed Transitional Structure as more appropriate structure for the Rabobank Group. Transitional structure is similar to matrix but it has two distinct features: First, it has fixed responsibilities in its crosscutting scope; second, it deals with specific international challenges ( Lindgreen 2012, pg 62)Transitional structure is made up of the following characteristics: Each national unit works on its own but provides sources of capabilities and ideas for the whole company. A national unit gets high scale economies by specializing on behalf of the whole company or large locations. Finally, the organization centre manages its global network by indicating the responsibility of every business unit and sustaining the systems, and maintaining culture and relationship to ensure network business units runs well. Transitional structure has its own disadvantage too. It demands a lot from managers in terms of their willingness to work and deal with the immediate responsibilities for the efficiency of the transitional as whole. Diffuse responsibilities make for similar complexities and deals with the problems within the matrix organization. Each structure type has its own disadvantages and advantages. Organizational designers choose structures according to strategic challenges they meet. For example, if they are seeking control they opt for a functional structure. If they want to promote flexibility and knowledge globally they choose transitional or matrix structure. Structural choices are determined by the strategic problems the company faces. There are nine-design test that are used to check exact fitting structural solutions. The first four test deals with the aim and challenges of the organization. The first one is The Market-Advantage Test that is an important strategy for the market principles. The second is The Parenting Advantage Test that fits the role of parenting n a corporate centre. The People Test is the third one that fits the structural design of people available. It is dangerous for a company to change from a functional structure to a multidivisional if it lacks managers with the skills of running a decentralized company unit. The fifth one is The Feasibility Test that is in a catch- all group. It shows that the structure must fit stakeholders, trade union, legal or similar constraints. There are other five tests proposed by Campbell and Goold on the general design principles. They are as follows: The Specialized Cultures Test that shows the important of joining the entire specialist in order to develop expertise in connection with each other. A structure collapses if it lacks important specialist culture. The Difficult Links Test asks whether the proposed structures will connect different parts of the company that are important but seems strained. The Redundant Hierarchy Test involves checking any structural design if it has many layers of management causing undue expenses and blockage. Delayering in regards to redundant hierarchies is a significant structural drift that existed in recent years. The Accountability Test stresses the importance of precise accountability, control and commitment of managers all through the structure (Kurokawa 2007, pg 12). The matrix structure lacks clear accountability. Lastly is the Flexibility Test is an important test in the fast moving world that allows for changes in future. The nine test discussed provide a rigorous testing for efficient structures. However, even if the structural design excels the test carried out, they need to match with other parts of the organization structure, relationships and processes. Each division gives the other strength. Organizational units in these branches provide products and services that cover asset management, mortgages, loans and savings, insurance, leasing, equity participation, corporate banking, and investment banking. Each organizational unit has its own management team with budget responsibilities regarding several aspects of their operations such as pursuing exploratory and exploitative innovations. Moreover, organizational units within branches operate in markets with varying levels of environmental dynamism and competitiveness – a condition required to observe units pursuing different innovative activities. Processes drive and support people in and around a company. These processes influence the failure or success of the company. They define how strategies are made and control the way employees and managers interact with each other and implement strategic actions. Organizational units in these branches provide products and services that cover asset management, mortgages, loans and savings, insurance, leasing, equity participation, corporate banking, and investment banking. Each organizational unit has its own management team with budget responsibilities regarding several aspects of their operations such as pursuing exploratory and exploitative innovations. Moreover, organizational units within branches operate in markets with varying levels of environmental dynamism and competitiveness a condition required to observe units pursuing different innovative activities. The transition of Rabobank from Multi domestic strategy to global strategy implies for a change from cultural processes to planning processes. Planning processes are typical administrative control where successful completion of strategies is got by planning and controlling allocation of resources and monitoring their use. The focus of the processes is to control the financial input of the company. A plan covers all parts of an organizations in terms of finances and the amount of resources allocated to each part whether divisions, functions or business units. It also gives detailed way of how to use the resources. This takes the form of a budget. For instance, the marketing function is given five million, this will require showing the amount spent on advertising, exhibition and staff. These cost items are monitored regularly to measure the actual expenditure against plan. The main advantage of this planned approach in comparison to strategic control is its ability to monitor how the strategy is made. The planning strategy varies in different ways. Planning is achieved by equality of work process like product and service features. Sometimes these job processes are matter to a thorough framework of review and assessment. This gives competitive advantage where companies are positioned on low price with commodity-like services or products. For instance, the charge of exchange in Internet banking is less than that of exchange made through branches. Enterprise resource planning system provided by software specialist like Oracle and SAP use complex IT to get planning type control. The system aims to mix the whole business operation including finance, manufacturing operation, warehousing and personnel ( Warner 2011, pg 54). Generalized planning approaches uses a formula to control resources allocated in an organization. Planning processes operates best in a stable and simple condition where a budget or formula applies equally in all units of a company and assumptions made to hold good for the complete budget or formula period. Formulae and budgets are inflexible where varying circumstances contradict the actual assumptions. Companies are penalized unfairly for increased changes in circumstances or rejected the resources in counter to opportunities unexpected in the original budget. Bottom-up planning is required in an organization because of the dangers of insensitivity faced. In bottom-up planning, local business units at the lowest level of an organization propose initial plans to the high ranks of corporate headquarters. The role of a company headquarters is to put up guidelines for the original plans and review them when complete. Initial proposed plans are usually incompatible with the other units’ plans and with the headquarters expectation and resourcing capabilities. Incompatibilities are resolved through processes of reconciliation involving bargaining and revisiting some of original headquarters guidelines. Relationships connect people within and outside organizations in particular ways. This could be relationship between organizational unit and the centre and relationship outside the firm that includes issues such as outsourcing (Green 2011, pg 21). The various processes, structures and relationship are studied in the light of three main challenges for a company. Thais includes the increased level of uncertainty and speed of change in the business environment. As a result, organizations have flexible design and skills of reorganizing. Knowledge sharing and creation is the fundamental ingredient for strategic success (Steger 2008, pg50). Organizational designs promote awareness of skill and support people to share knowledge. The increase in Internationalization has led to many challenges that include communication across wide areas, coordinating and building relationships across different cultures. Internalization has led to greater recognition of diverse types of organizations in the world. Internal Relationship in the Rabobanks entails the customers and the local members of the Rabobank. The local members are the shareholders of Rabobank Nederland that supports and advises them on how to provide their local services (Ramirez 2011, pg 60). The local members of the bank put the interest of the customer first and believe sustainable development of wealth and prosperity calls for careful approach in environment and nature. They aim to achieve further growth in the retail and wholesale market in the large cities. Internet, mobile telephony and television are used to achieve this. The bank lends to customers in small and medium sized business. The association between the centre and the business units forms the context in which managers operate (Becker 2009, p 89). The strategic planning style, controls the association between the business unit and the centre prescribing detailed roles for business units and departments. The financial control system is confined to setting financial targets, appraising performance, allocating resources and intervening to avoid or rectify poor performance. For a transnational corporation to succeed, it needs to get global competence, local responsiveness and organization wide learning and innovation which requires clarity of boundaries, relationships and the role of managers. To improve external relationship, more focus on extension networking should be given, in house resources minimized, and that all activities reside outside the company (Nijhuis 2009, pg 48). Virtual organizations are kept together by physical proximity of people, collaboration, partnership and networking. This organization feels real and it can lead to serious weakness as the companies become devoid of core competence and excluded from the learning that is got by undertaking these activities in house. Findings Related To Strategic Theories 2. Ways in which the process of change could be managed to ensure a smooth transition from its current strategy to a more related portfolio. Designing Strategic changes involves clear strategic direction. The CEO provides direction for making major differences by giving statement to employee from a multi domestic plan to a global strategy. Combining rational and symbolic levers where a consultant is used to make signal of important processes of change needed (Foss 2012, pg 32). Multiple styles of change are used to implement change, which includes participation of leaders and delegates, collaboration and education of small groups. Working with existing culture involves new process and are developed to final change. Monitoring change that requires setting to implement change in a process connected to improve the return of shareholders. To manage change requires global strategy that requires highly coordinated activities spread geographically around the work permitting for centralized coordination and management of critical business activities such as human resource, product development and finance (Zhou 2013, pg 40). Shared values that involve communication on managing centralized strategy bring more profit like global brand recognition, customer satisfaction and ways to lead the team to success. Different leadership styles are used to ensure effective change (Kyriakopulous 2010, pg 29).This involves education on small groups to discuss matters on a wide understanding, collaboration that involves every level and participation of leaders in order to retain power and propose element of the change process. There is also use of Computer Program Enterprise resource planning that allows the company to use a system of mixed applications to manage the business and run back office functions (Jeuken 2014, pg 78). ERP software integrates all parts of the operation including manufacturing processes, product planning, sales and marketing and development system to ensure the systems flows in an organization. To evaluate the competence of the staff and transfer in a performance management, some skill accountant, banking staff and HR are put in appropriate department. The staff members of an organization are trained to have competency in their work. Conclusions, Success and Key Issues of the Group 3. Identify the gaps that have encouraged to implement change and ensure the success of change is clearly identified Maintaining the momentum ensures the product portfolio is communicated to the customers, stakeholders and employees of the company so that the bank understands the importance of diversified product and how they can be accessed (Steger 2013, pg 34). Development of teamwork in a company and effective communication is important for change. In addition, training helps develop skills to maintain change. Decision making also empowers the employees by introducing authorization limit management that reduces the cost in an organization by going through the process of change and making sure feedback is available (Fenton 2010, pg 23). The structure of Rabobank has many footprints in different countries and its main product includes agribusiness in its four hundred and forty five local branches and international subsidiaries. Impact of Individual Contribution The assignment was quiet challenging but it enabled one to have a deep understanding of Rabobank in terms of its global contribution and the challenges that it is facing. Rabobank leads in marketing in Netherlands and in strengthening the operations of non-Dutch people. It is clear that Rabobank remains a leader in the area of Corporate Social Responsibility and excels in sustainable entrepreneurship and banking in the world. 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