ASSIGNMENT 01 (COMPULSORY) Due date 25 May 2023 Unique number 309052 Each assignment addresses a various of learning outcomes. Outcomes 1, 2, 3, 4, 5 and 6 will be assessed in Assignment 01. The learning outcomes clearly indicate the level of thinking skill you need to demonstrate when answering each question in the assignment. Case Study: Mike Brown CEO of Nedbank Group Limited Almost two years ago I had a leadership conversation with Mike Brown who at the time was new in his role as Chief Executive Officer (CEO). The financial services market in South Africa is an overcrowded market in which the banking industry is dominated by the Big Five: ABSA, Nedcor, FirstRand, Standard Bank and Capitec, followed by Investec and BoE. These banks account for over 90% of the retail market. Approximately 90% foreign banks are wholly focused on merchant banking and the investment completes the picture. The Post Office, Mutual banks, retailers, and cell phones companies have also entered the industry. MGP437U/102/0/2023 5 The meeting happened while the Hongkong and Shanghai Banking Corporation (HSBC) deal was on the cards, but shortly after fell through. A lot has happened since, as Brown explains: The Nedbank today is a significantly better organisation in all spheres than two or three years ago, whether you look at it from a shareholders performance lens, a staff engagement and values journey lens, a client lens, a regulatory lens or what we do in the community. Their vision to become Africas most admired bank with sustainable long-term success is built around these five components shareholders, staff, clients, regulators, and communities. At the time of the possible deal, they were clear about their strategy, but believed with HSBC the vision could be accelerated. When it did not happen there was, as Brown says, a lot of inward reflection around the importance of making sure that we deliver, so that there can never be any doubt in anybodys mind about why Hongkong and Shanghai Banking Corporation (HSBC) did not do the deal. Brown feels that their performance over the last few years indicates that the decision to not go through with the deal had nothing to do with Nedbank. Now that Brown has been in the hot seat for almost three years, what has he learnt, discovered, or been surprised at? Not much in fact. He had significant experience and exposure to banking in general and Nedbank in particular. He had exposure to various parts of the operations, had been the Chief Finance Officer (CFO) for five to six years and a transition from the previous CEO to him was seamless and exemplary to say the least. So, there were no real surprises. However, if asked he would advise young or newly appointed CEOs as follows: First of all you must be clear as to the role of the CEO of any organisation and the way I see it and what we are trying to build here is an organisation that is vision-led and values-driven. One of the key roles of the CEO is therefore to be an owner and custodian of the vision. You cant do that on your own, but by the time it is crafted you must be the one that is out there championing that to the internal and external stakeholders. As he sees it, another critical function of the CEO is to focus on creating a values driven culture organisation. What has in a way surprised him is the role-modelling that happens in an organisation of the behaviours of the leadership group, says Brown. Crucial to the journey are the values that the leadership team truly live by and the behaviours that they portray. These are modelled or imitated by the rest of the staff. Yet another crucial role of a CEO is to make sure you have the right people in your team and that they are on the right seats. Brown believes with a clear vision, the right values, and the right people in the right seats on the bus, you would probably be in good shape. Nedbank is known for their strong emphasis on values, a journey that resumed almost eight years ago, and that internally is branded as leading for deep green. Brown explains: It started with the executive team going through a particular process around leadership, understanding your influence on others, personal mastery, a much-defined leadership and culture values journey for the leadership team of the organisation. Nedbank has allocated managers to ensure that all principles are entrenched into their values and culture. We have action plans to close gaps where we believe more can be done to demonstrate our commitment to treating our valued clients with fairness. Nedbank has been successful in cascading that further down the organisation to thousands of staffs. Nedbank has a customer centric approach to banking which has helped in its growth. We acknowledge that client preferences are unique and fast evolving and continue to challenge us to use our financial expertise to do well and see money differently. To be relevant there is a continuous need for us to understand, anticipate and timeously deliver client experience that exceed expectations. This is central to all Nedbank strategic focus areas because innovation whether technology is a driver or not is a key to retaining existing and attracting new clients, which drives revenue growth. This is a strategic focus MGP437U/102/0/2023 6 area primarily in response to the material matter disruptive technologies, disintermediation, and increased competition. Our client-centred approach has resulted in Nedbank gaining a reputation as an innovative bank. We are increasingly being recognised for our market-leading digital innovations such as Market EdgeTM. , Instant Bond IndicatorsTM as well as the new Nedbank.co.za website, which is client-centred, leverages world class technology and can be used across all mobile devices. Internally, innovation has increased the efficiency and cost-effectiveness of our structures, systems, and processes, which ultimately benefit our clients. We have also changed non-cash transactions from ad-valorem to a flat rate, thereby saving clients R150m in fees annually. Based on deep insights of customer needs, relevant customer offerings have been developed for each segment. The youth and entry level banking segments, where it was under-represented for quite some time, represent 75% of the two million new clients gained and the balance of the growth in the competitive middle market and seniors segments. This is a good increase in the number of clients banking with Nedbank, now at 6.2 million individuals and small businesses. Our strategy to grow our transactional banking franchise faster than the market is driven by increasing our main-banked market share and deepening our share of wallet with new and existing clients. There is significant room to grow our approximately 11% retail main-banked market share to more than 15%, and similarly our share in wholesale business, although this is more difficult to measure against peers given the absence of independent industry benchmark, explains Brown. Simplifying, rationalising and continuously improving our processes and operations save costs and allow us to invest in our franchise and unlock new growth opportunities. Saving costs becomes more important in a tougher macroeconomic and more competitive environment, but operational excellence also provides benefits to clients, as client experiences are enhanced through simplification and optimisation. Our Information Technology (IT) system stability is an example of differentiation enabled by operational excellence to ensure client satisfaction he explains. Measurement, monitoring, and tracking is very important in any organisation, according to Brown. This is a universal truth that all great leaders understand. Brown says: If you set the aspiration of being vision-led and values-driven and you push the leading for deep green journey, you must figure out how to measure, monitor and track or evaluate progress. They came across a specific survey that they have been using consistently for the last five to six years as a measurement system to track their journey around culture and values. Their latest measurement came in as world class, which is a great achievement. The remuneration of leaders is linked to their ability to improve values matches and culture, as part of their performance appraisals. Other ways of measuring health of their internal culture also confirm the suggested improvement, again giving them different lenses through which to measure cultural improvement. Brown further says: We also measure how many staff are lost to competitors versus how many new hires are coming from competitors and are you a net gainer or loser in the talent pool. Over the last couple of years Nedbank have been a net gainer. Finally, they have employees that they lost but came back, many of them ascribing their return to the positive culture of Nedbank. Not all organisations focus so intensely on creating a valuedriven organisation, perhaps because deep down they just dont believe it will have a significant impact on their ultimate performance. Brown believes their values focus has impacted performance without a doubt. It is probably impossible to make the connection scientifically, but certainly I have no doubt that the culture and values journey has MGP437U/102/0/2023 7 played a big part in us retaining people in our organisation, attracting talent and the outcome of all of that has been pretty good performance. Nedbanks strategy to expand into the rest of Africa has evolved significantly. In the Southern African Development Community (SADC) and East Africa they have expanded the Nedbank franchise, with businesses in Zimbabwe, Lesotho, Namibia, and Malawi. They could well expand more in these areas through acquisition and other means. In Central and West Africa, they partner with Ecobank, and this relationship has deepened considerably. Ecobank bought another bank in Nigeria, called Oceanic and Nedbank supported them in this by providing their holding company with a loan, and so secured the rights to acquire 20% of Ecobank equity. As a CEO of Nedbank and a leader in the current dynamic, fast paced moving business and socio- political environment, Brown sees it as an opportunity. He feels the world is in a very difficult place right now, economically, with lots of challenges everywhere. I suppose leaders must find the opportunities for their businesses within those challenges and make a difference. What fascinates me is that there is always so much you can do in business, irrespective of what the outside environment is. Brown ultimately believes: At the end of the day, it does not matter what you pay people unless you enjoy coming to work every single day, which means you enjoy what you do, you enjoy who you do it with, you enjoy how you are treated. All those things that have to do with what it feels like around here, which is all about values, behaviour and culture if this is not right it is not going to work for you. Source: http://www.leadershipplatform.com/mike-brow-ceo-of-nedbank-group-limited/ [Accessed on 13 February 2023] NB: Note that the case study is applicable to all the questions. Question 1 Discuss how Nedbank can use Porters five forces model, to determine the level of industry attractiveness making specific reference to how industry forces affect the level of competition in an industry. Make use of examples from the case study to support your discussion. [15] Question 2 Identify and discuss the business-level strategy Nedbank has chosen. Make use of the generic competitive strategies model to support your discussion and make use of appropriate organisational context examples to support arguments made. [10] Question 3 Explain the different types of decisions that Nedbank managers must make under conditions of certainty and uncertainty. Use examples from the case study to support your argument. [10] MGP437U/102/0/2023 8 Question 4 Discuss the eight tasks of the strategic planning process. Make use of appropriate examples from the case study to support your discussion. [10]