The Case Study
Student Name
University Name
- Provide problem Statement
The outcome consequences and, the benefits of acquisition of Bank Abby
- Provide PESTEL Analysis
PESTAL Analysis
There is mixed impact of PESTAL elements has on the overall performance of the company. The PESTAL analysis consisted on the Political, Economical, Technological, Environmental and legal elements.
Political Factor
The most important factor of the PESTAL is the political factors which affect the performance and operation of the company. The overall impact of political on the performance on the company is positive as it has sustained democracy and strong institutions and rules of law.
Economical Factor
The economical factors of the country directly related with financial performance of the company. If economical factors or indicators show positive indicators than it has positive impact on the performance, these factors are inflation rate, GDP and disposable income. As for economical factor of PESTAL analysis of the Abby, it has positive impact on its performance.
Social Factors
Social factors plays vital role in order to maintain the positive image of the company in the market. The social factors are included like behavior with immigrants, power structure in the society, social norms and values, behavior about spending and savings, awareness about different aspects of the economy etc. so these social factors has correlated with performance of the Abby.
Technological Factors
In this modern era, if company did not anticipate the importance of innovate technology, than that particular business will be wipeout. Used of technology has minimized the cost of doing business. Using of different machines based on artificial intelligence has made tremendous impact on the performance of the company. As for Abby is concerned, if company did not pay attention on its importance than it will face huge pressure on its financial operations as compared to its competitors.
Environmental Factors
Environment factors are part of the business operations, due to climate change in the world there is huge negative impact on the operations and performance of the companies. There is need of using latest rules of business for better business environment. For that Abby has to invest in this factor as well.
Legal Factors
The legal factors are most positive and negative impact factor on the long run performance of the company. If the legal system of the country is highly complex and prolong than it will badly affect the overall financial and operational activities of the company.
- Provide SWOT Analysis
SWOT Analysis
The SWOT analysis is used for highlighting the overall position of the company. It’s a mixture of strength, weakness, opportunities and threat of the company. Every type of organization has strengths, weakness, opportunities and threats while working in the market. These four tools are related to internal and external factors of the company which represents the overall position of the company. The internal factors of the company mainly concerned with the internal strength and weakness of the company. On the other hand external factors consisted of external opportunities and threats. The external factors are considered in a view of market forces along with economic conditions, health, political situation and technological factors. Different organization who has been successfully doing their operation in the market has predicted market momentum better than others like Banking Abbey. The Abbey Banking has provided better resources for the development of product which enables to Abbey to overcome the pressure of competitors and satisfied the customers through valued services. This strategy of the company was consisted on the SWOT analysis though company identified their each factor and worked accordingly. Banking Abbey has used these for key elements of SWOT analysis to increase its strength for getting the better market position along with removing existing weakness to face the competition in the market. The Banking Abbey has improved leverage comparatively to its industry keeping in mind the regulations and other external environment for mitigating the external threats.
The overall strength of the Banking Abbey consisted on its resources and capabilities to build competitive advantages against the competitors in the market. The strength of the company mainly consisted on the it’s past experiences, physical resources, capabilities and human resource. These different strong pillars have made to Banking Abbey a strong organization which can face any type of competition in the market. The Banking Abbey has adopted different strategies which later developed into the strength of the company like offering parallel product and services in the market. The banking Abbey has successfully offered new products in the local market along with local consumer demands. The biggest achievement of the Banking Abbey was its diversified product portfolios which attract every type of customers in the market. Banking Abbey strategy for getting more strength was consisted on the concept of targeting different segments in the local market at the same time. This shows that Abbey has every type of product and services according to the demand of the customers. Banking Abbey has taken various steps and risk to get the advantages of like entering into mergers and acquisitions. These types of steps and risk have turned into the strength of the company.
There are number of weakness in which Abbey was lacking which enables to company to achieve the sustainable advantages over its competitors. Basically weakness of any type of organization consisted on its employees mean human resources available for the company, having past experiences and success rate, availability of the financial resources, controlled activities and physical resources. So these factors have vital role to overcome the weakness of the company. Due to less skilled human resources the customers of the Abby were not satisfied. Though overall demand of Abby products did not get down but there were dissatisfaction shown by the customers. These dissatisfactions were found through feedback which got from various platforms. In order to retain the customers, company needs to work on it otherwise competitors in the market will get its share which ultimately put more pressure on the performance of the company. The management of company was not good enough to manage its inventory along with cash circle. So there is a need to invest more for managing the inventory of the Banking Abbey. As human resource of the company is not consisted according to set standards like it does not follow the concept of work force diversity. There needs to diversify the work force which will improve the overall operation of the company as well as there will be representation of all the available human societies. Another weakness of the Abbey was low return on the investment. Though overall performance in terms of financial strength of the company was stable but yet returns was not higher. Investors are basically invested in the higher returns of the company which causes increase in the stock price of the company in the market. In order to increase the market price of the company, company needs to increase over all return the investment. There is need of focusing on all the stakeholders interest rather internally; otherwise this approach will develop poor relationship with the customers which in long term cause loss of customers on the basis of poor relationships. Banking Abbey needs to work on the introduction of technology into its operations as well. As for technology is concerned, company does not have talent to work out on the technology.
There are number of opportunities available for the Abbey which can turn into its core strength in the long run. These opportunities are more related to its different environments like macro environment and leverage to gain the more market share in the market. Opportunities basically connected with different factors like consumer income, innovative products based on technology, consumer likeness and dislikes and more importantly political and economical conditions of the country. E- Commerce is the most emerging opportunity for any type of business organization same for Abbey. Through e-commerce Abbey can work in local market as well as international market which can expand business operation as well. The social media the component of E-commerce which can be used for the growth of Abbey along with reducing cost related to entering into new market. There is need to work on the artificial intelligence for predicting about the behavior of the consumer, niche and different recommendations. In spite of these opportunities, there are more opportunities which can increase the market share of the company; these opportunities are related to getting the international talent, reducing cost of entering into new market, used of latest technology etc.
There are different threats associated with the operation of the company like used of technology by the competitors, economic growth of the country, rules and regulations of doing business, and different financial polices by the state. These threats can badly affect the overall market share of the company. For avoiding these threats company needs to take certain strategic decision for mitigating of outcomes of these threats.
| Strengths · Availability of resources · Past experience · Diversified portfolio · Strong hold on domestic products | Opportunities · Used of social media and e-commerce · Enter into internal market · Public awareness at the international level · Induction of technology into operation |
| Weakness · Lack of talent · Skilled human capital · Lack of technology · Work force diversity | Threats · Economical conditions · Rules and regulations regarding business · Political situation · Increase cost of product and services |
- Answer questions:
- How would you characterize Santander’s international strategy prior to its bid for Abbey? Why was Santander so keep on international expansion in retail banking?
The bid strategy was consisted on the following points
- Cost saving
- Increase in revenue
- Increase in the operation of the company
- Increase the good of the company in the market
- How might Santander’s acquisition of Abbey add value?
This acquisition was the 10th largest bank in the world as for its market capitalization was concerned and 4th largest in the Europe. This shows that it how huge impact on the Santander’s. The primary revenue of the bank was from the retail banking which was almost 85 % of its revenue. This shows that this acquisition resulted in diversification of Santander’s later. This acquisition was one of the most major cross borders in the retail banking in the Europe.
- Is acquisition the right way to appropriate value in this context?
Yes, the decision made by the company for acquiring Abby was highly acceptable strategic decisions. This decision made the company to diversify their products offered to their customers at the national and international level.
- Is Santander particularly well-placed to be the acquirer?
If the management of the Santander’s maintains the same management for better performance than it will add more value to the company. As Abby is one of the largest bank in the Europe and had expertise and market share in the country will add value.
- Do the projected cost synergies look attainable? How much attention should Santander pay to revenue synergies?
The decision regarding acquiring the Abby increase the value of the company in the market. This acquisition will increase the revenue of the company in the long run along with market share in the country. As for its cost is concerned, Abby was a profitable company under the efficient management. If Santander will maintain the same management than cost of the company will be along with access revenue will add more value in the assets of the company.
- What recommendations would you make to Emilio Botin to manage the acquisition?
Conclusion and recommendations for future actions
Lessons learned
As Emilio Botin was the most successful banker in the recent past who uplifted the banking services and products offered to general public and customers. I would recommend that company should manage this acquisition and manage to enter into more acquisitions for enhancing the revenue of the company. Emilio Botin can learn prone and cones from this deal or agreement which can later avoid cones. There is more need to do as for inventory management, used of technology for better product and services, needed to hire more talented staff that can satisfy the customers. So overall this was more effective agreement which earn good will and increase in market capitalization. As for this case study is concerned I have learned that if being CEO of the company, If CEO will take timely decision regarding increasing the market value and worth of assets, acquisition of profitable companies can increase the good will of the company.
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