Case study A

Operations function: The driver of strategy at the Commercial Bank of Mzansi

The Commercial Bank of Mzansi (CBM) was started in 1985. at that time, present chairman of the board Damien Mahlangu was appointed as the CEO. CBM has observed a steady growth since its humble beginning and has managed to develop a loyal customer base in the previously disadvantaged communities of Johannesburg. Today, there are 25 bank branches located throughout the South Africa, with the company's corporate head office in Waterfall, Midrand.

The bank provides a wide variety of banking services to commercial and non-commercial customers and has regarded itself to be a conventional, yet innovative, business. Its various branches are opened Monday to Friday 9 to 4 and Saturday 9 to 12. CBM ensured that most of its branches are located next to well-known shopping centres and the banks has installed multiple ATM machines. However, CBM's growth has brought on various issues. One of the challenges CBM is facing is ensuring that the bank has the right number of tellers available. The banks' management is aware that some of its commercial customers had recently expressed their frustration due to long waiting time. Another issue is the parking lot, which often becomes crowded during peak periods.

At the time CBM was going through a growth period, the general banking industry had been experiencing tougher competition. Competitors' strategies were to increasingly offer lower interest rates on loans and higher yields on savings accounts.

Under the leadership of Mr Mahlangu, CBM's board decided to develop a more aggressive strategy for the bank. It was evident that many of CBM's competitors were competing on cost. For that reason, it was imperative for the board to decide that to differentiate itself from its competition CBM should focus on customer service. The bank had already begun moving in that direction by setting up an online facility that would offer a 24-hour customer service department aimed at answering customers' banking questions. Although this seemed like a step in the right direction, difficulties, such as poor staffing and a lack of telephone lines, started appearing. When asked about the new strategy CBM was implementing, Mr Mahlangu explained that he wanted CBM to be able to attend to and solve all customer service issues in an aggressive manner. These were related to the main problem areas namely staffing, layout, and facilities. The chairman of the board emphasised on the creativity needed when adding improvements in customer service, such as on-line banking, and mobile apps. He believed that improving most aspects of the bank's operation would give CBM a competitive advantage.

The board presented their new strategy to Miss Thandeka Mbatha, vice president of operations. Thandeka, had joined CBM three years earlier and had worked her way up the corporate ladder. She was eventually promoted to the executive director level and understood the importance of operations management. She was requested to identify the important changes that should be made in the operation function to support this new strategy and present them at the next board meeting. Since joining the bank, Thandeka had been hoping for an opportunity to prove herself. This was her chance.

Questions

1. Why is the operations function important in implementing the strategy of an organisation? Explain why the changes that Thandeka and her team make could either hurt or help the bank. (5 Marks)

2. Identify three problematic areas where operations would have to improve at the bank. (3 Marks)

3. Based on the case study, identify ways that the operations function can improve the three problematic areas you have identified in order to support the strategy focused on customer service.How can the operations improve the three problem areas identified earlier? (7 Marks)

4. Think of the improvements identified in answering question 3. How different would these improvements be if the bank had a strategy of cutting cost rather than supporting customer service? (4 Marks)

5. Can the operations in the bank be digitized?

Why? (3 Marks)

How? (3 Marks)