Grupo Santander - a Strategic Analysis

Topics: Financial services, Bank, Grupo Santander Pages: 8 (1810 words) Published: April 19, 2010
SMM219
Organisation in THEIR Environment

Grupo Santander
A Strategy Analysis

Group1

STUDENT NO
0849925
0935655
0727788
0741846

Section Instructor: Dr. Adrian Haberberg

TABLE OF CONTENT

Page

1. Executive Summary…………………………………………………………………1

2. Introduction………………………………………………………………………….2

3. Analysis of banking industry: Porters’ Six forces and PEST Analysis……………..3

4. Appraisal of Grupo Santander strategy: Ohmae’s 3Cs………………………………5

5. Recommendations……………………………………………………………………7

6. Bibliography……………………………………………………………………………8

7. Appendix……………………………………………………………………………….9

Executive Summary:

• Banking Industry is the industry that is widely seen as the bedrock of the economy because banks help transfer risk and provide liquidity within an economy • Non banking financial services companies are the biggest threat to the banking industry • Despite the economic recession, the nature of competition in the industry is still fierce • The driving factors for this competition include mergers and acquisition, technology improvement, product differentiation and Corporate Social Responsibility. • Ability of Grupo Santander to succeed depends on how its strategy responds to these factors

Introduction

In this report we have analysed the environment (industry) of Grupo Santander based on current issues, emerging trends and their implications using; Porters five forces and PEST analysis tools. From these analyses, we were able to conclude that the nature of competition is fierce despite the present economic downturn.

Also in this report, we have analysed Grupo Santander’s current strategies in relation to current trends in the industry using Ohmae’s 3Cs. We have also accessed its financial position in relation to those of its competitors. Although Grupo Santander has increased its presence in U.S and Europe through acquisitions, it has neglected the emerging markets of Asia and Africa which would have been good a good opportunity to further profit maximisations. Therefore we have made some recommendations for the company which we believe will increase their market share and profitability.

Analysis of the Banking Industry: Porter’s Six forces and PEST Analysis

PORTER’S FIVE FORCES ANALYSIS

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The Banking Industry is widely seen as the bedrock of the economy because banks help transfer risk and provide liquidity within an economy. This is why the recent crisis in the banking industry has had a major impact in the global economy. The industry as compared to other industries has the largest amount of Government involvement in terms of how much deposit the bank must keep and how much the bank can lend. Firms would be deterred from entering into the banking industry because of Government regulations which has become stricter and also the huge capital investment requirements would not be easy to come by in the present economic situation. The G20 summit has outlined the future regulatory structure designed to reduce the risk of another crisis in the industry (Norma Cohen 2009 Financial Times 2009).

Non-banking financial services company are the biggest threat to the banking industry. Services offered by the banks are being provided by other financial institutions. Zopa which is an internet base outfit for lending and borrowing money, has recorded significant increase to their customer base since the beginning of the crisis in the Banking Industry13. Despite the economic recession, the banking industry has been really competitive. Mergers and acquisitions have made the market fiercer. Every bank is attracting customers from competitors by improving the speed and quality of their services, lowering their rates charged for their services, which has a great impact on their Return on Assets and customers are getting better services due to this competition. (See Appendix 1) Individual customers do not pose as much threat as...

Bibliography: 1. Banking technology [online] (updated26 march2009) Available at: http://www.bankingtech.com/bankingtech/article.do?articleid=20000143663 [accessed on 16 October 2009]
2. Business week; 4/27/2009, Issue 4128, p61-61,1p
3. Cohen, N. (2009) ‘Doubts over political resolve for reform’, Financial Times. London (UK): Oct 6, 2009. pg. 1
4. Citigroup financial statement – MSN Money [online] Available at:
9. Lynch R., 2000. Corporate Strategy 2nd edition Harlow: Pearson Education
10. £100 when you join us [online] Available at: http://www.alliance-leicester.co.uk/current-accounts/premier-100-switching.aspx?ct=p1rfshomepageprs [Accessed on 17 October 2009]
12. Wall Street Journal Europe 27-08-2009
13. Zopa’s Trophy cabinet [online] Available at: http://uk.zopa.com/ZopaWeb/public/about-zopa/awards.html [Accessed on 15 October 2009).
Source: Forbes (Accessed on 19 October 2009)
2006 – 2007: increased by 9%
Source: Grupo Santander Website (Accessed on 19 October 2009)
2006 – 2007: increased by 19%
Source: Citi group Website (Accessed on 19 October 2009)
2006 – 2007: decreased by 83%
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