Section 1.0 Executive Summary
Previously Merchant’s Bank of Halifax, the Royal Bank of Canada was founded by 134 Halifax businessmen was founded in 1869. However, it was later changed to its present name in 1901. In 1941, RBC became the largest bank in Canada moving in parallel direct as Canada as far as the economy is concerned. With its headquarter based in Toronto, Ontario Canada, RBC is able to cater to 15 million highly diverse clienteles needing different services as indicated in the organization’s five business segments given its highly diversified and competent 79,000 workforce. At present, RBC thrives in the image of being a leader in Canadian banking industry holding the top spot in terms of market share. In addition, RBC tries to stand ground to its vision statement of always earning the right to be their client’s first choice. And while there are no specific wordings that would represent RBC’s mission, the three strategic goals of the company stood in place of it mission.
This being, “In Canada, to be the undisputed leader in financial services; globally to be a leading provider of capital markets, investor and wealth management solutions, and in targeted markets to be the leading provider of select financial services.” However, both vision and mission statement has been updated as specified in page 9 and 10, respectively in compliance with the models created by Erica Olsen and Fred David for an effective vision and mission statement. Instead we propose the following vision statement: “To be our client’s first choice when it comes to all their financial services needs because our people offers the best customer service in all of the banking institutions within the country, on top of the most secured and most profitable financial-related services.” For the mission statement, we suggest to word it as follow: RBC intends to be the undisputed leader in providing personal and commercial banking, insurance, capital markets, wealth management and investors’ services to our clients—individuals, private and public organizations and other financial institutions, from Canada and the other parts of the world. Accomplished in aid of our highly skilled and reliable employees and latest secured technology, RBC intends to bring its service on a global perspective to be able to serve more and build more communities.” Changes had been incorporated to address the missing elements stated under Olsen and David’s model and make it more effective.
While RBC has five business segments, this situational analysis concentrates on the personal banking segment in the Canadian market. This is done to focus extensively on this aspect of management more intently as to provide a more appropriate recommendation. At present this particular business segment is under the leadership of Jennifer Troy, it is also the widely utilized segment among MCRI’s five business segments. This segment is also widely supported by private and public clienteles. Nevertheless, while the Royal Back of Canada is among the top performing banks and financial institutions in Canada, a situational analysis has been conducted and initiated for the purpose of finding the right strategy that will help increase the market share of RBC.
Keywords: The Royal Bank of Canada, situational analysis, external force, internal forces, SWOT analysis,
Corporations conduct a situational analysis by reviewing the internal and external environment. The purpose of this review and situational analysis is to recognize and understand the organization’s most integral components—capabilities, the business environment and its customers. This process is usually conducted to support the marketing plan that would target creating a lasting relationship with the customers. Aside from the review of the organization’s internal and external environment, a situational analysis also incorporated the use of several other methods of analysis like Porter’s Five Forces Analysis, 5C’s Analysis and S.W.O.T. Analysis. These methodologies allow for a more extensive review of the business situation that confronts the organization that could provide valuable information that managers could utilize for effecting planning. For this paper, the proponents will conduct an extensive Situational Analysis on a highly reputable financial institution—the Royal Bank of Canada. After the analysis, the proponents will provide strategic recommendations that could help further improve the status of the organization. In addition, an implementation plan and evaluation matrix will also be provided to help utilize the proposed recommendations.
Section 2.0 Vision, Mission, Objectives & Strategies
Among the internal factors considered for this situational analysis includes an evaluation of the organization’s vision, mission, objectives and strategies. In this case, the vision and mission statement of the Royal Bank of Canada shall be evaluated utilizing marketing models. These models include Erica Olsen’s formula for effective vision statement (Olsen) and Fred David’s Framework for writing an effective mission statement (Cochran, David and Gibson).
The Royal Bank of Canada do not use the title “mission statement” instead this is translated to “strategic goals” (Royal Bank of Canada). According to Gordon Nixon, Royal Bank of Canada’s former CEO, the term strategic goal was used in replacement of the traditional mission statement. This is because these provisions are carefully planned goals that are intended to be completed and accomplished within a given period. Whereas, a mission station simply acts as the purpose for existing which is under no specific timeframe for accomplishment (Royal Bank of Canada).
2.1 Vision Statement: Royal Bank of Canada
At present, Royal Bank of Canada’s Vision Statement is worded as follow:
Figure 1: Royal Bank of Canada’s Vision Statement
Chan Kim and Renee Mauborgne define a vision statement as the company’s picture in the future (Kim and Mauborgne). It answers the question, where would the company be after ten years? What progress would have been made? How much improvement has been incorporated in the company from time it was founded until it reaches its tenth year or so in the industry? Thompson, Strickland and Gamble provide that a vision statement serves as a roadmap of the company’s future (2006). Another short but substantial definition of a vision statement was provided by the National Defense University in which it specifies that a vision is a tangible image of an organization (2014). However, a vision statement is not simply a group of compounded words put together for the purpose of stating what could not be achieved only to appear credible and goal-oriented.
In the case of Royal Bank of Canada, the company’s vision statement is short and very straight to the point. However, aside from being concise and direct to the point, there are other elements that should be included in the organization’s vision statement. For the purpose of evaluation, this paper will utilize Erica Olsen’s Elements of an Effective Vision Statement to review the existing vision statement of Royal Bank of Canada. Olsen identifies six elements of an effective vision statement. These includes the following: (a) audacity, (b) capitalization on core competencies, (c) purpose-driven, (d) inspirational, (e) motivational and (f) capacity for future-casting. Table 1 presents an evaluation of Royal Bank of Canada’s vision statement according to Olsen’s six elements of an effective vision statement.
Olsen’s Model of an Effective Vision Statement
Olsen’s Model: Six Elements of an Effective Vision Statement
Erica Olsen provides a six important elements for an effective vision statement. According to Olsen, each element stands for something that is integral to the future of the organization. The elements all contain certain specifications that should be followed so that every stakeholder of the organization can be guided by it to allow everyone to move towards the same direction.
- Audacity – stands to represent the founder and the management’s dream for the company. However, this dream has to be realistic and attainable. It will also help if the vision statement is measurable. This will ensure that the organization can verify whether the organization has been able to accomplish the said “dream” and if it the organization has been successful, they could easily change it to something more ambitious.
- Capitalization on core competencies – a vision statement according to Olsen should be the embodiment of the organization’s unique competency. It should embody the organization’s history, assets, resources, strengths and unique capabilities among other things. This will serve as a careful reminder to the employees and the management that the dream they have for the organization is attainable because of the different factors that are already within the organization.
- Purpose-driven – a vision statement should encourage action for a reason not a mechanical compliance. A vision statement should give the employees a strong conviction to do their task and their responsibilities. It will enable employees to comply not out of merely following with what is required, but because they believe that it is for the success of the organization.
- Inspirational - refers to the organization’s vision statement ability to inspire and initiate a reaction from the people. The vision statement should challenge everyone within the organization to action.
- Motivational – a vision statement must be able to clarify certain things for the stakeholders of the organization. This includes clarifying things like the direction that the organization is heading, the market position that it wants to achieve and the activities they needed to pursue.
- Capacity for future-casting – finally, a vision statement should be able to say something about the future of the organization within the next three to five years. It must be able to present a vivid picture of the organization future.
2.2 Mission Statement: Royal Bank of Canada
Fred David said that the mission statement is an essential primary step in a strategic management process (David 195). Mission statement bears the reasons for which the organization was created. It contains the objectives, strategies, goals, policies, allocation of resources and the concern for employees (Cochran, David and Gibson 27). Given this inclusion, Fred David proposed a nine-factor framework for an effective mission statement. These nine factors include: (a) customers, (b) market, (c) product and services, (d) technology, (e) concern for survival, growth and profitability, (f) philosophy, (g) concern for employees, (h) self-concept, and (i) concern for nation building.As mentioned earlier, the Royal Bank of Canada does not have a specific mission statement. Instead, the management refers to it as “strategic goals.”These goals are as follow:
Figure 2: Royal Bank of Canada’s “Strategic Goals” / Mission Statement
Using Fred David’s Framework of an Effective Mission statement, Table 2 presents an evaluation of the Royal Bank of Canada’s current mission statement, also referred to in the organization as “strategic goals” as explained by its former CEO Gordon Nixon. The three-column table specifies a through analysis of RBC’s mission statement carefully citing evidences directly lifted from the current mission statement of the organization.
David’s Framework of an Effective Mission Statement
After reviewing the present mission statement of the Royal Bank of Canada, it was found that it scored three out of the nine factors identified in David’s Framework. RBC only got a point from these three factors: (a) product and services, (b) markets and (c) self-concept. This means that the existing mission statement utilized by the Royal Bank of Canada must be revised and satisfactorily meet all the nine factors to create an effective strategic management process.
2.3 Redefining Royal Bank of Canada’s Vision & Mission Statement
The existing vision and mission statement of the Royal Bank of Canada was reviewed using the models proposed by Erica Olsen for an effective vision statement and Fred David for an effective mission statement. As a result, this paper proposed the following redefined vision and mission statement that satisfies all the elements mentioned by both Olsen and David in their respective models.
Figure 3: Redefining Royal Bank of Canada’s Vision Statement
On the right side is the proposed vision statement for the Royal Bank of Canada. This proposed vision statement incorporates the six elements mentioned by Olsen in her Model of an Effective Vision Statement. It still mentions all four criteria that the existing vision statement contained. However, it also incorporates the two elements that the existing vision statement missed—capitalization on core competencies and motivational elements.
The proposed vision statement also provides sufficient details that would inspire and motivate employees because it mentions the need of providing excellent customer service which also stands as one of the core competencies of the organization. In addition to the strength of the organization’s workforce, another core competency mentioned in the proposed mission statement include a highly secured system and a profitable financial-related services.
On the other hand, below in Figure 4 is the existing “strategic goals” or mission statement of the Royal Bank of Canada and beside it is the proposed mission statement as per the requirements mentioned in Fred David’s Framework of an Effective Mission Statement.
Figure 4: Redefining Royal Bank of Canada’s Mission Statement
On the right box is the proposed mission statement for the Royal Bank of Canada. It incorporates all the nine factors specified by Fred David in his Framework of Effective Mission Statement. The proposed mission statement mentions all the five business segments that RBC offers, i.e. personal and commercial banking, insurance, capital markets, wealth management and investors’ services unlike the existing strategic goals which only specified three—capitalmarkets, wealth management and investors’ services. In addition, the proposed mission statement identified a self-concept of being an undisputed leaderwhile at the same time stating a philosophy through the line intends to lead and serve by example.Since an organization’s biggest and most important assets are its employees, the proposed mission statement acknowledge the contribution of the employees (i.e. highly skilled and reliable employees) as well as technology (i.e. latest secured technology) in helping the organization achieve its advocacies for growth (i.e. bring its service on a global perspective) and nation-building efforts (i.e. build more communities). The clients were identified as individuals, private and public organizations and other financial institutionsas well as the market—Canada and the other parts of the world.
2.4 Strategies: Royal Bank of Canada
In the recent Conference Call of the Royal Bank of Canada’s executives held last August 22, 2014, RBC’s newly appointed President and CEO Dave McKay enumerates the organizations strategies. Among them includes:
- The ability of the organization to adapt to the changing needs of the clients and adapt to the changing market conditions (p.3).
- Strengthening of the multi-channel distribution including an online investment channel (p.3).
- RBC also adapts the latest technological breakthroughs and incorporate it to their system to address the latest technological advancement as with the case of the mobile investment retirement planners and the new mobile application for business owners (p.3).
- The organization has also made some adjustments to their business model. One of which is adapting a Global Asset Management (p.4).
- Building a client-focused franchise that is described as traditional, client-driven corporateand investment banking and origination activities (p.4).
Objectives: Royal Bank of Canada
Royal Bank of Canada’s objectives are categorized according to several criteria or segments. These include the organization’s (a) environmental and social objectives, (b) financial objective and (c) investment objective. Through the aid of Teradata, an esteemed logistics company aimed at helping organizations make realizable organizational objectives, the Royal Bank of Canada has been able to develop an ambitious yet realizable financial and investment objectives. These are as follow:
- 61% improvement in marketing cycle time;
- 20% increase in high-value customer base;
- 13% increase in client profitability;
- 40% increase in direct marketing response rates, and
- 11% increase in RSP deposits based on targeted marketing program.
In addition, the Royal Bank of Canada also formulates environmental and social objectives as a response to the organization’s Corporate Social Responsibility. These include the following:
- Reduce our environmental footprint
- Manage environmental and social risks
- Offer environmental products, services and advice
- Promote environmental sustainability
These environmental and social objectives are achieved through (a) the reduction of the organization’s greenhouse gas emissions and the amount of office paper it uses, (b) organization’s commitment to reduce electronic waste going to landfill down to zero, (c) RBC’s pledge to double the amount of LEED certified space it occupies, (d) by incorporating the addition of sustainable communities, which joins climate change and water, as one of RBC’s three priority environmental issues, and (e) the expansion of the organization’s long-standing environmental and social credit risk management policies to cover all regions where it operates .
3.0 Situation Analysis: Royal Bank of Canada
This section of the report will present a detailed discussion of the situational analysis of the Royal Bank of Canada. It will include a general overview of the banking and credit union industry where RBC belongs. In addition, a general review of the organization’s direct competitors shall also be analyzed. The previous section along with the details from this section will provide for the identification of the Royal Bank of Canada’s strengths, weaknesses, opportunities and threats. This will be reviewed and analyzed using the S.W.O.T. Matrix which would be utilized to the strategy formulation later on into this paper.
Industry Analysis: Banking and Credit Union Industry
According to the World Economic Forum held in 2010 held at Geneva, Switzerland, Canada was named among the top ten safest banking systems in the world . This was supported by the reputable Global Finance magazine in October 2010 . Aside from a secured system, Canada’s banking and credit industry is also hailed as a chartered bank, with over 8,000 branches and 18,000 automated banking machines strategically scattered all across the country . Given this statistics, the Canadian banking industry also holds the world’s leading per capita generating ADB.
Canada’s banking system is identified according to two distinct categories—the Big Five, composed of Canada’s five biggest national banks and the banks classified as smaller, second tier financial institutions . The banks belonging to the Big Five includes (a) The Royal Bank of Canada, (b) Toronto-Dominion Bank, (c) Bank of Nova Scotia, (d) Bank of Montreal and (e) Canadian Imperial Bank of Commerce . However, this has recently been changed to Big Six with the inclusion of the National Bank of Canada in 2009 . Aside from being a bank, the members of the Big Six are also referred to as an international financial conglomerates. As such, the members of the Big Six also performs other functions not typically performed by the other regulated banks. Among these functions include brokerage activities, insurance, credit cards and mutual funds.
Figure 5: Summary of Canadian Banking Industry Performance & Demographics
The banking industry in Canada is affected by different forces. Included in the forces that help shape the trends and perspectives of Canadian banks are (a) economic challenges, (b) new growth strategies, (c) changing consumer behavior and (d) the need for technology upgrades. In 2013, Diane Kazarian stated in her report on the Perspective on the Canadian banking industry that amidst the global recession in 2008, Canadian banks has been able to survive the challenges by relying strongly on the strong capital levels and track record .
3.1 Competition Analysis
In total there are 77 banks in Canada with approximately 6,150 branches . However, directly competing with the Royal Bank of Canada are five other banks who are members of the Big Six. These banks include (a) Toronto-Dominion Bank, (b) Bank of Nova Scotia, (c) Bank of Montreal, (d) Canadian Imperial Bank of Commerce, and (e) National Bank of Canada.
Toronto-Dominion Bank.Originally, these are two different banks—Bank of Toronto which was founded in 1857 and Dominion Bank founded in 1869. However, in 1955 both banks decided to merge. Like the other five banks who are members of the Big Six, Toronto-Dominion Bank’s headquarters is located in Ontario, Toronto. In 2013, Toronto-Dominion Bank declared a CA$6.662 billion net income . With 78,748 employees scattered within the bank’s 1,150 branches, Toronto-Dominion Bank caters to 22 million clients worldwide .
Bank of Nova Scotia. Founded in Halifax, Nova Scotia in 1832, the headquarters of the Bank of Nova Scotia is in Ontario, Toronto. As of May 2014, the Bank of Nova Scotia declared a total asset of CA$791.8 billion and a net income of CA$1.8 billion. The bank has a total of 21 million clients being served by 83,000 highly-diverse employees from its 1,190 branches located in 55 different countries worldwide .
Bank of Montreal. The Bank of Montreal was founded in 1817 at Montreal, Quebec. However, the headquarters of the Bank of Montreal is in Ontario, Toronto. It is also the oldest bank in Canada operating for almost two centuries. The Bank of Montreal has over 12 million clienteles worldwide. With over 47,000 employees in 900 different branches , BMO has a total assets of CA$542.0 billion and net income of CA$3.2 billion as specified in its 2013 Annual Report .
Canadian Imperial Bank of Commerce. The Canadian Imperial Bank of Commerce or CIBC, was a merger of two banks like the Toronto-Dominion Bank. In this case, it was the merger of the banks Canadian Bank of Commerce founded in 1867 and the Imperial Bank of Canada founded in 1875. The merger occurred in 1961. At present, the CIBC has a total of 42,354 full-time employees in the bank’s 1,100 branches. The 11 million clients of CIBC contributes to over CA$12.8 billion revenue and CA$3.4 billion net income.
National Bank of Canada. The National Bank of Canada is Canada’s sixth largest bank. It is the most recent addition to the Big Six. However, unlike the five members the headquarters of the National Bank of Canada is in Montreal. The National bank, however, is the largest bank in Quebec. With 2.4 million clients, it has over 4252 branches across the Canadian territory. As indicated in the National Bank’s Annual report, its net income as of 2013 was recorded at CA$1,554 million and a total revenue of CA$5,163 million(The National Bank of Canada).
Figure 6: Big Six Market Share
As presented on the pie graph in Figure 6, it shows the the Royal Bank of Canada hold the biggest slice of the market share. This only suggests a stable market for the organization.
3.2 Analysis of External Forces
The external forces necessary for evaluation of a situational analysis include the following: (a) political, (b) socio-cultural, (c) economic and (d) technological forces. The review of external forces would take into consideration the economic drivers, regulations, technological breakthroughs as well as the current trends and lifestyle of the people that could significantly make a direct or indirect impact to the organization.
Political Drivers. The banks and credit unions are Canada affected by two regulators. These include Office of the Superintendent of Financial Institutions and the Financial Consumer Agency of Canada. These departments are responsible at monitoring and implementing the provisions covered by the Canada’s Bank Act. Originally enacted in 1871, the said law is constantly being modified and adjusted to keep up with the current trends and most recent demands of the banking industry. In fact, every five years the law is submitted for review and evaluation as specified in its sunset clause. The said law is applied to a total of 24 subsidiaries of foreign banks 20 domestic banks and 22 foreign branches operating in Canadian territory.
These two regulating body states that the reason for the stability and good reputation of the banking and financial institution in Canada is because every single organization operating within the industry are strictly complying with every provisions stated under the law governing banks and credit unions. In fact, majority of the Canadian banks and financial institutions even go to the extent to navigating through the necessary changes from their business models, system of operations and management of their resources including retooling using the IT system that could ensure greater compliance.
Socio-Cultural Drivers. The socio-cultural drivers refer to the consumer-behavior and their reaction to the changes in the economy thereby affecting their purchasing power. While the world recently experienced the impact of the global recession, Canada has been able to lessen its impact gradually. This is after the housing industry in the country has managed to recover after 25 years of low performance. In fact, for the last 25 years the amount that people pay for availing of their house is 3.5% the average of their disposable income, even increasing to 4.5% in the very recent year. Significantly, this would naturally affect the debt-to-income ratio. As a response, Canadian consumers became very discerning and began putting more to the amount of equity thereby creating stable arrears to the total number of mortgages.
When the Canadian consumers realized that the implication of the recession could put them exposed to a high amount of debts given their very mediocre income. Hence, majority of Canadians have translated this to something productive and apportion a lot of their earnings to paying their debts. It could be assessed that the Canadians way of thinking or the culture of the country puts more weight on the future that the comfort of the present. In relation to this, a survey conducted by the Certified General Accountants Association of Canada highlights that majority of Canadians (81%) thinks that Canadian banks are more stable than any others and 76% believes that Canadian banks help contribute to the improvement of the success of the economy.
Economic Drivers. Amidst the devastating effect of the recently concluded global economic crisis, the Canadian banking industry survived it with barely little impact. While it is true that during the recession, the economic drivers had been dramatically affected. In the following figures below (Figure 7 & 8), it is evident that unemployment rate was up by 8%, while GDP was down during the first quarter of 2008, slightly performing better by the second and third quarter but continued to drop by 2009. However, before the end of 2009, the economy started to recover and continues to provide a promising outlook towards the road to recovery.
Figure 7: GDP Growth Rate (2000-2011)
Figure 8: Unemployment Rate (2005-20011)
Technology Drivers. The latest breakthroughs in technology offer a rewarding promise to almost every industry. However, while technology intensifies the threat to security also increases. Utilizing an electronic platform makes transaction easier but more prone to being intercepted. Hence, the Big Six has invested CA$55 billion from 1996 to 2009 in a technology that would secure their banking system against threats of hacking and sabotage(Kazarian 6). This intensified the trust of consumers to Canadian banks. In addition, the investments of the Big Six also facilitated for efficient, secure and accessible banking that consumers highly favored.
There were also IT infrastructure adapted that were designed to address securing data integrity and usability. In fact, this technology aid in reporting liquidity and integration of data source. Banks started using IT to attract more consumers because newer banks have already applied innovations like cloud-based technologies and service-oriented architecture-based systems designed to make a transaction more efficient and secure.
Royal Bank of Canada: Opportunities and Threats
After extensive review of the external forces affecting the industry, along with the review of the competitors’ performance, Table 3 reflects RBC’s potential opportunities and threats.
The Royal Bank of Canada along with its subsidiaries operates under the brand name of RBC. Founded in 1869, the Royal Bank of Canada is one Canada’s largest financial institution and one of the world’s largest bank in terms of market capitalization (Royal Bank of Canada). In addition, the Royal Bank of Canada is also one of Canada’s Big Five, the top five financial institutions in the country. RBC has over 79,000 employees catering to approximately 16million clienteles from Canada, the United States and 40 different countries worldwide. Needless to say, RBC is among North America’s financial service company offering a highly diversified and rich product and service portfolio. Among the services offered by RBC include personal and commercial banking, insurance, capital markets products and services, wealth management services and investors’ services. Each business segments is spearheaded by competent and highly trained individuals. In 2013, RBC reported an annual net income of CA$8.4 billion, with a R.O.E. of 9.4%. The Company has been able to set successfully for 2013. In fact, RBC has been able to surpass their objectives as specified in Figure 9.
Figure 9: Performance of the Royal Bank of Canada (2013)
Source: Royal Bank of Canada: Annual Report 2013 http://www.rbc.com/investorrelations/pdf/ar_2013_e.pdf
According to the Annual Report submitted by the Royal Bank of Canada in 2013, the financial objective set by the company in 2012 was exceeded by the company’s performance in 2013. RBC noted that in 2012, the financial objectives of RBC were as follow:
Business Segments: Royal Bank of Canada
There are five business segments currently operational at the Royal Bank of Canada. A list of these segments is presented below with a short description of each business segment.
Insurance. RBC offers life, property, casualty and health insurance to both individual and group clients from all across the Canadian territory. In addition, RBC also provides wealth accumulation solutions and reinsurance for clients.
Capital Markets. The Royal Bank of Canada offers two services under the business segment of Capital Markets. These include (a) Global Market and (b) Corporate and Investment Banking. This is offered to governments, institutional investors, public and private companies and central banks worldwide.
Investor and Treasury Services. Institutional investing clienteles are provided with services to protect assets, maximizes liquidity and effectively manage the risk across several controls worldwide. These include financing, custodial and advisory services.
Wealth Management. Royal Bank of Canada addresses the needs of the most affluent and high net clienteles from Canada, the United States and some selected regions in Northern America. With the aid of RBC’s distribution channels and third-party distributors, RBC offers trust, wealth management solution, asset management products and full suite of investment options.
Personal & Commercial Banking. Services offered to personal and business banking for clients in Canada, the US, and also the Caribbean. Retail business services are also offered in the three indicated regions.
Royal Bank of Canada: Strengths and Weaknesses
SWOT analysis is an important aspect utilized during the process of strategy formulation. Table 6(a) and 6(b) reflects the matching of strengths and opportunities identified during the analysis of the organization’s internal forces. This will be employed for the purpose of converting the weaknesses and threats. Through this process, series of strategies and recommendations had been drawn to benefits RBC.
There were seven identified strengths of the Royal Bank of Canada and four identified weaknesses. However, despite the statistics it can be related that RBC still has enough leads to assert a competitive advantage. According to the review of the internal forces affecting the organization it has been revealed that RBC has established a strong and secure brand name that would generate enough confidence and trust among consumers. From the numerous citations, awards and recognitions received by the organization which includes being named as the best bank in North America and the best bank in Canada, it is secured and substantiated by a survey revealing the strong public confidence on the brand name of the Royal Bank of Canada. RBC also relies on its wide and diverse product and service portfolio given the five business segments of RBC, which is not found in any of its five direct competitors. Finally, RBC has also documented a very stable and secure financial positioning. This is supported by the figures provided in RBC’s 2013 Annual Report and continues until the 3rd quarter performance of the organization in 2014. In addition, RBC has also been able to surpass all of its financial objectives in 2012.
On the other hand, Royal Bank of Canada also had to confront a couple of roadblocks. In fact, majority of the roadblock identified pertains to how RBC utilizes technologic and all other factors related to it. One of which was the recent controversy that RBC has to face in 2013 after it has been accused of wrongfully hiring foreign temporary workers to replace the 45 IT workers who were then under its payroll (Tomlinson). Presumably, this was seen as a violation of the employment clause all in an effort to save money in salary expenditures. Still in the issue of information technology, one of perceived weakness of RBC was in reference with the potential risk of utilizing the latest technology and platform. Amidst the CA$55 billion investment of the Big Six to secure the banking system in Canada, it has been proven insufficient given all the news of massive fraud and theft using electronic banking technology. Finally under technology, RBC does not seem to rely on the use of social media as an effective means of promoting and marketing that the organization has no active social media account unlike most local banks in Canada. However, needless to say, RBC’s website earned the top spot from the 2010 Canadian Bank Public Web Site Rankings commissioned by the Forrester Research Group (Royal Bank of Canada). Needless to say, RBC lacks the strategic approach in management and business operations. One way this is reflected is with the poorly constructed vision and mission statement of the organization. Supposedly, an organization’s vision and mission statement is among the first step to strategic management process (David 195). Unfortunately, it falls short in providing a good impression. Instead, RBC’s VM statement is too generic, redundant and lacks the personal touch. It fails to represent the organization and capitalize on the capacity and advantage of the organization among the competitors.
If, among all the factors, RBC’s weakness was centered on technology, it is also the same factor that offers immense potential. Since the technology is one of the fastest growing industry, it is no wonder that almost all other industries are benefiting from every single breakthroughs and innovation created and develop under its umbrella. Given this nature of technology, RBC can immensely take advantage of this consistent, dynamic development in technology. Aside from technology, RBC is also in the right spot to benefit from the improvement of the economic drivers after going through the most arduous phase of economic recession. RBC is also fortunate to be situated in a community that can be classified as economically-matured and financially-conscious society. Give this nature of the society to which RBC caters to, the Canadian’s are very mature about handling their finances. This is the reason unlike, in the US, the Canadians did not fall into a dramatic housing and real estate crisis.
Finally, after extensive review of the external forces this paper was able to identify three potential threats that could cause a major setback to the organization. One of the threats was in reference to fraud and theft. Many are still doubtful whether there is ever such a thing as complete security. Given this condition, it could compromise the use of many of RBC electronic platforms which the organization has fully invested on beginning in 1996 to 2009. Also, it was mentioned that the regulatory protocols are being updated, modified and improved every five years. This can be a bit overwhelming considering that five years is not exactly a long time. This run the risk of disrupting the continuity of practices that had to be applied and develop to address the earlier changes. Finally, RBC should be alarmed that the National Bank of Canada has been able to enter and make its way to the Big Six. This could only mean that new entrants are not exactly going to have a hard time breaking in the industry provided it was able to meet some of the requirements. This is specified under Porter’s Five Forces Analysis in reference to barriers to new entrants.
Based on the result of the SWOT analysis presented in Table 6(a), the following strategies are presented in Table 6(b) which takes into consideration the result of the TOWS Analysis. From the overall result of the matching, it revealed that RBC should capitalize on product differentiation.
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