A situation analysis is general conducted to generate information about an organization’s status as far as financial and operating position is concerned. It is also done to identify the competitive position of the organization and enumerate the internal and external forces that could significant affect the organization’s performance. In lieu with this, a situation analysis on the Royal Bank of Canada has been conducted to assess the organization’s performance after the recently concluded global economic recession and the news of the gradual but steady growth in the economy. This is done in an effort to contribute substantial support for the recommended strategies which will be discussed later on in this presentation.
Before delving into the discussion of the internal and external forces, allow me to provide you with a short introduction about the Royal Bank of Canada. Founded in 1869, the Royal Bank of Canada is among the oldest financial organization in the country, with approximately 145 years of experience, the bank has been able to grow substantially both in size and finances. In fact, at present, there are approximately 1,209 branches of the bank that can be found worldwide catering to about 16million clients. 12 million of which are local clients distributed within Canadian territory. As for RBC’s net income, it was recorded at CA$8.4 billion in 2013 with a total assets of CA$ 513million increasing from 2012’s net asset of CA$ 383million (Royal Bank of Canada).
The Royal Bank of Canada has a strong brand name given the recognitions and citations that it received throughout the years. It has been labeled as a leader in sustainability. Among these include being named as the Best Bank in 2007 by the The Banker, it was also named among the Top 100 Most Powerful Brands in the world and is acknowledged as the most respected corporations in Canada (The Royal Bank of Canada). RBC is also among the Big Six of Canada, dubbed as the most stable, most secure and largest banks in the country. The organization takes pride of it rich product portfolio composed of five stable business segments including (a) personal and commercial banking, (b) insurance, (c) capital markets products and services, (d) wealth management services and (e) investors’ services. RBC is also run and managed by a highly diversified workforce composed of over 79,000 employees (Royal Bank of Canada). The Company relies on their biggest asset to deliver and exceed their financial objectives as indicated in the table present in page 22 of this report. Its reliable workforce is also attributed for the RBC’s ability to cater to its 27% market share, the biggest among all the six members of the Big Six.
Nevertheless, RBC is also confronted by numerous adversaries. Among these issues include the most recent controversy that it got involved with in 2013. This involved the case of 45 Canadian IT personnel who was replaced by foreign temporary workers. This raises questionable ethical practice on RBC’s part. In terms of business practices, it is noticeable how RBC employs a generic image of a financial institution. Instead of capitalizing on the rewards delivered by social media and intensifying its promotional capabilities, RBC rather utilizes the traditional system. Majority of the members of the Big 6 have already employed an electronic version of their annual report into their website. However, this is not seen with RBC. The Company’s MV statement is also poorly constructed not giving a good image of the Company.
Given all these mentioned information, we have formulated RBC’s strengths and weaknesses. RBC thrives on their strong brand name created and supported by its strong financial positioning. The rich and highly diverse product and service portfolio is also among the reason RBC is the most preferred bank by consumers given its ability to address mostly all of its needs relating to finances and money management. Nevertheless, RBC should still consider working on building its reputation as an employing institution after the incident involving the 45 Canadian IT experts. RBC should also try to broaden its perspective by embracing the latest breakthrough and capitalizing on the capacity of social media (Tomlinson).
On the other hand, the external environment of RBC was evaluated using the information generated from its 5 direct competitors as well as an industry evaluation of the general condition of the banking and credit industry as well as the four important external drivers—(a) political, (b) socio-cultural, (c) economic and (d) technological drivers. There are two regulating bodies responsible at ensuring that all members of the banking association in Canada complies with the Bank Act of 1871. These organizations include Office of the Superintendent of Financial Institutions and the Financial Consumer Agency of Canada. Also, a significant politic aspect of the Bank Act of 1871 is its provision that states that every five years the policy should be reviewed and modified according to the trends and demands in the industry. The socio-cultural drivers involve consumer-behavior, in which consumers of the banking industry in Canada are financially-mature and responsible. They have in fact, allocated 4.5% of their disposable income in covering their debts (Reddy). Economic wise, the general economic condition of Canada is more favorable as compared to the US. In fact, from 2010 onwards, Canada has been documenting positive growth in GDP as well as progress in the employment growth. This is favorable considering that it increases the purchasing power of consumers in the country. Finally, technology wise, the members of the Big Six has been active since 1996 to 2009 in investing on securing the banking system making it accessible, secure and productive for the consumers’ benefit (Kazarian). The overall, banking industry in Canada has been tagged as among the Top 10 most secured banking system in the world. It is also among the most accessible considering the 8,000 branches and 18,000 automated banking machines strategically scattered all across the country. 3.4% of the nation’s GDP is also contributed by the banking industry (Ministry of Finance).
The highly favorable external environment fosters a very positive environment for RBC. Nevertheless, there are also identified threats as with the easy entry of the National Bank of Canada among the Big Five, now Big Six. The regular modification of the provisions stated under the Bank Act of 1871 is also a threat as far as continuity is concerned. This could significantly affect the ongoing projects and programs implemented by the organization should it fall under the category that is to be modified.
Kazarian, Diane. A New Normal: Perspective on the Canadian Banking Industry. Industry Report. Birmingham, Alabama: PricewaterhouseCoopers, 2013. Web.
Ministry of Finance. Ministry of Finance: Ontario Budget 1998 Paper. 20 November 2006. Web. 26 October 2014.
Reddy, Aala Santhosh. Canadian Banking Industry: Performance and Perspective. Industry Report. Teaneck, NJ: Cognizant , 2011. Web.
Royal Bank of Canada. About Us: Royal Bank of Canada. 23 October 1995. Web. 25 October 2014.
The Royal Bank of Canada. “Awards and Recognition: The Royal Bank of Canada.” 27 November 2007. The Royal Bank of Canada Website. Web. 30 October 2014.
Tomlinson, Kathy. “News: Canadian Broadcasting Corporation.” 6 April 2013. Canadian Broadcasting Corporation Website. Web. 27 October 2014.
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