External Analysis of National Commercial Bank Jamaica Ltd

Topics: Jamaica, Inflation, Unemployment Pages: 9 (2744 words) Published: April 9, 2013
External Analysis of National Commercial Bank Jamaica Ltd To conduct an external analysis, one must evaluate three environments; the general or macro environment, the industry and the competitive environment. In this paper, we will examine NCB’s macro environment, its industry and competitive environment. General Environment According to Carpenter and Saunders (2009), the macro environment can be defined as the larger forces that a firm faces, which includes political, economic, socio-cultural, technological, environmental and legal issues. In order to analyze NCB’s general environment, we employ the PESTEL model. The PESTEL model allows managers to carefully evaluate the political, economic, socio-cultural, technological, environmental and legal framework in which firms operate in an attempt to comprehend the potential for market growth or decline (Carpenter and Saunders 2009). In order to fully apply the PESTEL model, we will first determine the significance of each PESTEL force in relation to the study of NCB. Secondly, discover and classify how the information gleaned from research can be applied to each force and finally, analyze the information and make conclusions. Political The political force examines all the factors that impact a customer’s confidence and spending, Jamaica’s political environment is fairly stable and will be evaluated in four areas stability of the political environment, taxation policies, trading agreements, trade and social welfare regulations. The system of government that exists is constitutional parliamentary democracy, operating through three branches; the legislative, executive and judiciary. The executive branch consists of the chief of state who is represented by the Governor General and the head of state - the Prime Minister - who is determined by legislative elections held no later

than every five years. The Prime Minister is elected when he or she obtains the majority coalition in the House of Representatives. Jamaica has three major political parties the Jamaica Labour Party, the People’s National Party and the National Democratic Movement, with the balance of power shifting between the first two. Over the years, Jamaica has had violent elections, but neither of these incidents has ever barred the winning party from sitting in Parliament. In more recent years, general elections have been witnessed by independent observers, and have also become peaceful. According to Davis (2011), Lisa Shoman, the lead observer from the Organization of American States reported that the 2011 general elections were incident free; there were no disturbances or issues significant enough to be of concern. In the past this was a significant threat as, banks loss many product hours due to violence and small break outs of civil unrest. Jamaica has been noted as having a complex taxation regime, which results in significant numbers of individuals and businesses not complying with the country’s taxation measures. Recommendations from the Matalon report indicates that improved efficiency and effectiveness by the Tax Administration Office of Jamaica will help reduce tax compliance time and increase revenue collection. PRIDE Jamaica a program funded by the USAID is designed to revisit and reengineer the legal and regulatory framework governing Jamaica’s taxation regime in order to ensure higher levels of compliance. This is a threat s individuals and business may find it harder to evade taxes as banks face pressure from the government to identify individuals whose savings or investments are above a certain threshold making them eligible to pay taxes. Therefore individuals and businesses may favour unregulated schemes in an attempt to continue to evade taxes.

The final indicator is Jamaica’s slow implementation of government policies. According to the article “Where is the Government?” economic problems exist because the government does not have the courage to implement, sustain, manage and control feasible...
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