Westpac Banking Corporation: An Essay On MIS And Porter's Five Forces Analysis.

Identify a business that has recently experienced challenges / issues or taken advantage of opportunities related to information systems/technology management from any newspaper or journal published in the last ten years.

About Westpac Banking Corporation

Westpac Banking Corporation or Westpac is an Australian bank and a financial service provider. It has its headquarter in Westpac Place, Sydney. This bank is ranked second amongst the big four banks of Australia. According to report of 2015 Westpac is having 13.1 million customers along with being the Australia’s largest branch network having about 1429 branches and 3950 ATM’s all across Australia. The name “Westpac” was first used in the year of 1982 when the BNSW merged with the Commercial Bank of Australia (westpac.com.au, 2018). The structure of the business mainly consists of five key divisions and they are namely Consumer Bank, Commercial and Business bank, BT Financial bank, Westpac Institutional Bank and lastly the Westpac New Zealand. This five unit serves almost more than 13 million customers. This report mainly discusses about the issue that is related to the information system of the Bank (westpac.com.au, 2018). Along with this the report also discusses about the management of the Information system in this organisation and this is done in terms of the Porters competitive force model. The report also highlights the ways in which the Management Information System helps this organisation.

One of the resent issue faced by Westpac was on 13 June 2017 when the bank accounts of the customers were locked for around three days. This lock down made the customers very much furious and they had blasted the bank as well. Many customers were unable to buy their food as well due to this lock down. The day was Friday when the technical glitch hit the mobile and the online banking service. This glitch had thrown about thousands of long weekend plans of the Australian’s to disarray. There was also a case where a customer pleaded to the bank on the following Monday night as her property transaction will be at risk if she was not able to transfer the funds (news.com.au, 2018). According to her the statement was “I am trying to access my money so that I can buy food but I don’t know all of my account numbers off by heart, so I can’t use phone banking — what is going on?”. Additionally, it was written by Jack Lewis that he is leaving this bank immediately. The customers also reported about waiting for longer time in the phone lines of Westpac’s customer service line. Along with some people also added that the call was hung up or there was a playing message which stated that the lines were closed. The social media team of Westpac stated in their Facebook account that only a limited number of customers were having this type of problem. The post also stated that the customers who are having problem in logging in to their accounts may call the bank for further assistance. Along with this the bank also stated that they are working on the process of making the customers get access to their accounts. They also apologised to those who were affected due to this. Daniel Beilin stated that the Card less cash was not working even after the event. The customers of Westpac demanded for the explanations regarding these technical problems as there were lots of similar technical problems in the last few months. The spokesperson of Westpac in a statement stated that the bank is working for solving the issue that had affected only a small proportion of the customers. Westpac also promised for reimbursing the customers who were affected by this incident and were incurred with fees and charges due to this outage.

Recent Challenges Faced by Westpac

The Management Information System is used by Westpac globally for the purpose of collecting the information along with the maintenance and aggregation of this information for the purpose of informing the decisions regarding the operations performed on a day to day basis (Lee and Yu 2012). Along with this information regarding the overall management across the whole organisation is also provided on a timely basis. The Management Information System of Westpac is mainly dependent upon the combination of the internally developed along with the third party vendor developed systems and the applications.

The MIS of Westpac and the various applications are capable of producing the reports on definite frequencies as well as on the ad hoc basis (Van De Walle Turoff and Hiltz 2014). This helps in providing the necessary information to the management of Westpac along with the regulators for the purpose of monitoring the financial health’s along with the various risks and the operations taking place at Westpac.

The systems of Westpac and the applications are very much essential for the smooth as well as the effective operations of the group. One of the core component of the Westpac’s risk management framework is its business Continuity Management program (Hasan 2013). This mainly includes the continuity of business along with the planning for recovery from various disasters. Westpac have a goal of maintaining the value of the shareholder along with the minimisation of the impacts on the employee’s brand and the reputation. It also ensures the ongoing provision of the various banking as well as the financial services provided by Westpac to its customers during an event of business disruption similar to the one discussed above (Moreno et al. 2014). In the entire Westpac group, the BCM program is applied. It does not depend on whether the activities are outsourced to the various related bodies or the third party service providers. And this happens regardless of the place they are located in.

Porters five force refers to the holistic strategy framework which helps in taking of the strategic decisions which is far away from just the analysis of the current competition. The main focus of Westpac is on the process in which the Westpac Banking Corporation builds a sustainable competitive advantage in the industry of banking (E. Dobbs 2014). By use of this forces the bank will be able to explore all the profitable opportunities in the entire banking sector. The main components of porter five forces are listed below along with the diagram of Michael Porter’s Five Force Framework.

Management Information System of Westpac

New innovations are brought by the new entrants along with the new ways of doing the things. This initially puts a pressure on the Westpac Banking Corporation by means of lower pricing strategy along with reduced costs associated with providing of new value propositions to different customers (Porter and Heppelmann 2014). All this challenges have been greatly managed by Westpac banking corporation which is also associated with building up of an effective barrier for the purpose of safe guarding the competitive edge.

There are various ways of handling The Threats of New Entrants some of them are listed below:

• One of the way is by use of new innovative products and services. New customers will be brought by the use of new products along with providing a reason to the old customers to buy the products of Westpac Banking Corporation.
• Building of the economics of scale for the purpose of lowering the fixed cost per unit.
• Capacities are to be built along with providing money for research and development process. Due to defining of the standards regularly by established players like Westpac the new entrants are likely to enter this dynamic industry (Baum 2013). This ultimately results in the significant reduction of the window for extraordinary profits for the new firms which also discourages the new players present in the industry.

The raw materials of almost all the banking industry are brought from the suppliers. The position of suppliers is dominant in nature which ultimately decreases the margin of the Westpac Banking Corporation’s earning in the market. Negotiating power is used by the powerful suppliers in the Banking sector for the purpose of extraction of higher prices from the firms in the banking field (Dälken 2014). The main impact of the bargaining of the suppliers is the lowering of the overall profitability of the banks.

The ways of tackling the Bargaining Power of the Suppliers are listed below:

• One of the way is by building up of an efficient supply chain with the multiple suppliers.
• By the process of doing the experiments with the various project designs by use of different materials (Rothaermel 2015). This will help in shifting from one supplier to another if the price of the raw material of one supplier goes up.
• Making of dedicated suppliers whose business will be depending upon the firm.

There are many demands of the Buyers. The main wish of the customers is to pay a lower price for the best offerings that are available. This initially puts a pressure on the profitability of the Westpac Banking Corporation in the long term (Perdana Roshetko and Kurniawan 2012). The bargaining power of the customer depends on the Smaller and more powerful base that the customers are having. This means that the ability of seeking increased discounts and offers is also increased.

The ways of tackling the Bargaining Power of the Buyers are listed below:

• A large base of customer is to be built which will greatly be helping in two different ways. one of the way is, the bargaining power of the buyers will be reduced and another way is that it will be providing an opportunity to various firm so as to streamline its sales as well as the processes involved in the production.
• Innovations regarding the new products. Most of the customers are seeking for discounts and offerings on the established products (Gobble 2012). If Westpac Banking Corporation comes up with new products, then the bargaining powers of the buyers will be limited.
• The defection of the existing customers of Westpac Banking Corporation to its competitors will also be greatly reduced by the use of new products.

The industry probability suffers when a new product or service is capable of meeting the similar needs of the customer in numerous ways. this can be better understood by the use of an example that is services like the drop box or google drive acts as a substitute storage device for the hardware drives. If a value proposition is provided by the new product which is different in a unique way from the present offerings, then there is a threat to the substitute product or service.

The ways of tackling the threats arising from new products or services are listed below:

• Orientation should be regarding the service provided not oriented around the product.
• The core needs of the customers are to be understood rather than understanding the customer is buying.
• The switching costs of the customers is to be increased.

The overall profitability will be decreased along with driving down of cost will occur if the rivalry existing between the present competitors in the industry is intense (Vargas Hernández and Velázquez-Álvarez 2013). The Westpac Banking corporative works in a very competitive Banking industry so the competition does take a toll regarding the overall long term profitability of this organisation.

Porter's Five Force Analysis of Westpac

 The ways of tackling the Rivalry Amongst the Existing Competitors are listed below:

• This can be done by building up of sustainable differentiation
• Building up of scale for better competition
• Existence of collaboration with the competitors so as to increase the size of the market instead of competing only for the small markets.

After analysis of the all five competitive forces it can be concluded that the Westpac Banking Corporation would be gaining a complete picture of what are the factors that will be affecting the profitability of this organisation in the banking Industry. The game changing trends can be identified at the early stage associated with swift response for exploiting the emerging opportunities (Laudon and Laudon 2016). If the managers of Westpac Banking corporation understand the Porters Five forces, then they can easily shape the forces in their own favour.

Conclusion:

Westpac Banking Corporation has faced a lot of challenges in the recent year. Porters Five Force Analysis is a strategic Management tool that can be easily used by this organisation for the purpose of understanding the underlying levers responsible for the profitability of the organisation. The managers of this organisation can use this Five Forces for the purpose of understanding the influence of this five forces on profitability. This will ultimately result in developing a strategy for enhancing the organisations competitive advantage along with a long term profitability of this bank.

References:

Baum, M.B., 2013. Introduction. In Service Business Costing(pp. 1-18). Springer Gabler, Wiesbaden.

Dälken, F., 2014. Are porter’s five competitive forces still applicable? a critical examination concerning the relevance for today’s business (Bachelor's thesis, University of Twente).

2014. Dobbs, M., 2014. Guidelines for applying Porter's five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), pp.32-45.

Gobble, M.M., 2012. Innovation and strategy. Research-Technology Management, 55(3), pp.63-67.

Hasan, M., 2013. Sustainable supply chain management practices and operational performance. American Journal of Industrial and Business Management, 3(1), p.42.

Laudon, K.C. and Laudon, J.P., 2016. Management information system. Pearson Education India.

Lee, S.K. and Yu, J.H., 2012. Success model of project management information system in construction. Automation in construction, 25, pp.82-93.

Moreno, D.P., Hernandez, A.A., Yang, M.C., Otto, K.N., Hölttä-Otto, K., Linsey, J.S., Wood, K.L. and Linden, A., 2014. Fundamental studies in Design-by-Analogy: A focus on domain-knowledge experts and applications to transactional design problems. Design Studies, 35(3), pp.232-272.

news.com.au (2018). Westpac outage: Online banking, mobile app down for three days. [online] NewsComAu. Available at: https://www.news.com.au/finance/business/banking/westpac-outage-leaves-customers-stranded-over-long-weekend/news-story/26ab23f37be4b679da3ec0f66d9a4483 [Accessed 17 Jan. 2018].

Perdana, A., Roshetko, J.M. and Kurniawan, I., 2012. Forces of competition: smallholding teak producers in Indonesia. International Forestry Review, 14(2), pp.238-248.

Porter, M.E. and Heppelmann, J.E., 2014. How smart, connected products are transforming competition. Harvard Business Review, 92(11), pp.64-88.

Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.

Van De Walle, B., Turoff, M. and Hiltz, S.R., 2014. Information systems for emergency management. Routledge.

Vargas Hernández, J.G. and Velázquez-Álvarez, L.V., 2013. Sustainability as a Strategy of Responsible and Competitive Development Sostenibilidad como Estrategia de Desarrollo Responsable y Competitiva. Daena: International Journal of Good Conscience, 8(1), pp.64-81.

westpac.com.au (2018). About us | Westpac. [online] Westpac.com.au. Available at: https://www.westpac.com.au/about-westpac/ [Accessed 17 Jan. 2018].