Managerial Control Systems

Question: Discuss the organizational structure of commonwealth bank group. Answer: The Commonwealth Bank was formed under the Commonwealth Act 1911 and started their operation in 1912 (commbank.com 2016). This bank has offered two different services to the customers such as money savings facility and general banking services. The organization has more than 800,000 shareholders and 52,000 employees (Simons 2013). The organization has provided a full range of financial services to help people of Australian build and manage their finances. It has been observed that the Commonwealth Bank has provided integrated financial service such as retail banking, business banking, funds management, institutional banking, insurance investment, premium banking and share broking products and service. The strategic strength of the Commonwealth Bank is its brand value, scale and diversified mix in the business. According to Kerzner (2013), the managing director of the Commonwealth Bank has implemented a vertically integrated business. The focus of the management is on the new structural development and deliverables to the customer segments. The Managing Directors of the Commonwealth Bank Mr. David Murray has announced a changed set of responsibilities for the leadership team (Beck et al. 2013). The organization has implemented four new business divisions such as retail banking, premium financial service, investment and insurance service and institutional and business service. As argued by Arjani and Paulin (2013), the new organizational structure has reflected the changed business mix of the Commonwealth Bank and strategic position of the organization. The organization is focused on better wealth management and meets the requirements of the customers. As opined by Hull et al. (2013), the customers want a simple transaction banking service and complex wealth management requirements. It has been observed that the organization has implemented the vertical integration of business units to ensure that the decision making process is high speed and responsiveness. It has been observed that the new structure has been implemented by the authority of the Commonwealth Bank in February, 2002, with an aim to providing development opportunities for the senior executives of the organization (Jeon and Wu 2013). The organization has provided services like retail banking, premium financial service, institutional and business services and investment insurance service. As argued by Schlagwein et al. (2014), the organization has implemented the international financial service, technology implementation, operations and procurement, group human resource management and office of the CEO. The organization has maintained a critical financial responsibility of the customers and the shareholders (Din 2013). The organization has maintained three different centers such as revenue centre, expense centre and profit centre. Revenue Centers: As stated by Simons (2013), in every business the revenue center is a part which gains the revenue from the product sales or service. It has been observed that the manager is responsible for the revenue of the organization. The organization has gained financial support from the more than 800,000 shareholders (Kerzner 2013). It has been observed that more than more than 75% of the staffs are the main shareholders of the organization (Arjani and Paulin 2013). According to the financial report of the organization it has been noticed that the organization has collected more than $4,618 million profit in 2015. As stated by Beck et al. (2013), the annual profit of the organization for the previous year has increased by 2% as compared to the annual profit of 2014. It has been observed that share price of the organization has increased by $1.98 for every share and it remains unchanged till now. The organization has more than $903,075 million assets in 2015 (commbank.com 2016). It has been noticed that the organization has increased their financial performance by implementing the business expansion strategy. The organization has expanded more than 1100 branches in Australia (Arjani and Paulin 2013). On the other hand, the organization has established more than 3,700 post agencies in Australia (Simons 2013). The management has decided to provide better services to their customers. Therefore, the organization has opened more than 4300 ATMs in Australia (Hull et al. 2013). Expense centre: The expenses centers are sections of the organization that do not contribute directly to the profit. The expense centers are divided in two different categories such as cost centers and discretionary expense centers. The business of the private banking organization depends on the small and medium enterprise customers (Jeon and Wu 2013). The customers are regional and agribusiness customers. The customers have provided a wide range of services and solutions to the bank. The organization has provided the service to their personal and institutional online trading customers (Schlagwein et al. 2014). The managers of the Commonwealth Bank have implemented wealth management. Wealth management is the combination two different part of business such as funds management of manufacturing and distributional capacity and services of the organization (Din 2013). The organization has provided the services such as insurance and financial advice business division. The business division includes different segments such as Colonial First State Global Asset management and Colonial First State (Simons 2013). It has been observed that the organization has taken specials advice regarding the organizational financial management and strategy (Kerzner 2013). Moreover, specialists have provided advice on different areas such as finance, treasury, investors relations, security and property. The organization has implemented the risk management strategy to develop appropriate strategies and risk frameworks to allow the group to take conscious exposure to credit. Profit centre: It has been observed that the Commonwealth Bank Group has provided different banking services to their customers such as home loans, credit cards, personal loans, transaction accounts demand and term deposits (Beck et al. 2013). The organization has gained its leading market share in home loans, retail deposit and personal loan department. The organization has offered business loans, equities and trade finances for the agribusiness products. The organization has collected the revenue from the international market also (Arjani and Paulin 2013). The organization has collected more than $4,618 million profit in 2015 (commbank.com 2016). The previous year annual report shows an increase in annual profit by 2% from that of 2014 (commbank.com 2016). It has been observed that share price of the organization has increased by $1.98 for every share and it remains unchanged till now (commbank.com 2016). The organization has more than $903,075 million assets in 2015 (commbank.com 2016). Reference list: Arjani, N. and Paulin, G., 2013.Lessons from the financial crisis: bank performance and regulatory reform(No. 2013-4). Bank of Canada Discussion Paper. Beck, T., De Jonghe, O. and Schepens, G., 2013. Bank competition and stability: cross-country heterogeneity.Journal of financial Intermediation,22(2), pp.218-244. commbank.com, (2016).About Us - Commonwealth Bank overview - CommBank. [online] Commbank.com.au. Available at: https://www.commbank.com.au/about-us/our-company/overview.html [Accessed 6 Jun. 2016]. Din, G.Y., 2013. Performance and profit sensitivity to risk: a practical evaluation of the agro-industrial projects developed by Israeli companies for the CIS and Eastern European countries.Agricultural and Food Economics,1(1), pp.1-23. Hull, J., Treepongkaruna, S., Colwell, D., Heaney, R. and Pitt, D., 2013.Fundamentals of futures and options markets. Pearson Higher Education AU. Jeon, B.N. and Wu, J., 2013. Do Multinational Banks Use Internal Capital Markets and How?: Evidence from Bank-Level Panel Data in Emerging Economies. InEvidence from Bank-Level Panel Data in Emerging Economies (January 25, 2013). Asian Finance Association (AsFA) 2013 Conference. Kerzner, H.R., 2013.Project management: a systems approach to planning, scheduling, and controlling. John Wiley Sons. Schlagwein, D., Thorogood, A. and Willcocks, L.P., 2014. How Commonwealth Bank of Australia Gained Benefits Using a Standards-Based, Multi-Provider Cloud Model.MIS Quarterly Executive,13(4), pp.209-222. Simons, R., 2013.Levers of control: how managers use innovative control systems to drive strategic renewal. Harvard Business Press.