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External analysis of the Bank of Queensland Essay

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External analysis of the Bank of Queensland

            The Bank of Queensland (BOQ) offers financial services which comprises of retail and business banking, insurance and even wealth management among others. In the late months of 2001, with its newly appointed managing director, the bank realized there was a need for fast growth and several growth strategies were put in place. The strategies included installation of talking automated teller machines on owner-managed branches (OMB) and branch-based network (Bank of Queensland n.d). The plan also included expansion of its branches from 90 to about 250 in the next five years. The OMB strategy was to turn the bank managers into small business operators or entrepreneurs. However, the parent firm was to provide investment, loan products, technological support and sales and marketing support.  The main purposes for the strategies were to improve deposit and lending system, improve the income/cost ratio and hence double its growth. OMB was introduced so that a maximum value can be attained through the competitive advantage.

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            However, there were no programs for monitoring and evaluating the OMB project. OMB also did no have established strategies for marketing and promotions. Furthermore, the stakeholders’ roles were not yet known and thus had no roles to play in BOQ. Using the strategies made BOQ to be exposed to several risks and these included; adoption of a new training and education system, which was time consuming and expensive; competition in the banking industry; the interstate expansion movement; scales of required competencies; the support and commitment from  the community; scales of infrastructure during the expansion process and many others. Furthermore, for the bank to grow very fast it was supposed to provide high quality tools and services to its sales and marketing team, improve customer service, expand its network locally and internationally and at the same time create a sustainable value for its shareholders. The old system could not support all these modifications and therefore, a new banking system was required.

Electronic Data System Corporation (EDS) was then chosen to provide the new banking system. EDS and BOQ then implemented the new banking system on time and on budget thereby enabling the bank meet its objectives. This made BOQ to be the most advanced bank in technology thereby enabling it to continue with its expansion plans into the new markets. Merging with Pioneer building society increased BOQ’s local market in the north and central parts of the state. Furthermore, its position in the debt financing was much strengthened in 2005 when it took the debt finance division which was worth more than $78 million, of ORIX. At the end of 2007, its merger proposal which was worth about $590 million was accepted by the Home Building Society members and this gave them 35 more branches and accessibility to the Western Australia which has a strong growing economy (Bank of Queensland n.d.).

Nowadays, the shareholders have their roles and with its OMB model the bank has a network of not less than 280 branches country wide and more than 2,500 automated teller machines (Bank of Queensland n.d.). With the strategies BOQ was able to reduce its expenditures thereby saving costs and increase the deposit rate and this resulted to an increase in its net profit in 2008.  However, recently its net profit has reduced slightly due to intense competition coming from other banking industries.

Word Count: 561

Reference List

Bank of Queensland n.d. Retrieved May 5, 2009 from

http://www.boq.com.au/aboutus_corporate_history.htm

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