Strategic Management - Strategic Audit and Future Strategic Challenges of Commerzbank AG

SRH UNIVERSITY OF APPLIED SCIENCES BERLIN

Strategic Management - Strategic Audit andFuture Strategic Challenges of Commerzbank AG

Students BA10: Hamlet Hayrapetyan*, Waqas Hasan, Ali Ibrahim

Course: Strategic Management

Instructor: S. Stocklauser

Date of submission: 25.01.2013

Hamlet Hayrapetyan, Ali Ibrahim, Waqas Hasan Strategic Management: January 2013

AbstractThis scientific paper and analysis is about strategic

position of Commerzbank in the market for the subject "Strategic

management" which is part of our studies of 5th semester at the

SRH University of Applied Sciences Berlin.

The study consists from analysis, interview, and provided

services comparison with the competitors and forecasts on the

future strategies and market position of the bank. The first

section of our paper includes a detailed description about the

Commerzbank AG as a company, its resources and capabilities, and

the industry, a study about the services that are being provided

from the bank and a comparative study with the main rivals in the

market which, at the end of the day, will bring us to where

Commerzbank is positioned in the industry, how much are the

consumer benefits, how strong is it in the competition, how much

competitive advantage it has and what kind of strategic segments

they cover. The Second part of the paper will focus on the future

of Commerzbank. We will go through SWOT and PESTLE analysis to

find their strong and weak sides and connect it to the "mood of

the bank on the future" to make forecasts based on facts &

figures.

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Table of ContentsI. Analysis..........................................................5i. Hypothesis........................................................5

1.Introduction......................................................52. Company and industry analysis....................................7

2.1 Description of the company....................................72.2 Analysis of resources and capabilities.......................10

2.3 Industry Analysis: Commerzbank Strategic position............112.3.1 Comparative study: Market Segments and Competition analysis 13

3. Strategic Position for the future: What will be.................153.1 New brand promise: “The bank at your side”...................15

3.2 Strategic milestones of “Roadmap 2012”.......................153.3 Main goals to be achieved by 2016............................16

3.4 Risk Minimization............................................163.4.1 Global outsourcing.........................................16

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3.4.2 Different markets and industries...........................173.5 Image “CSR Cooperate Social Responsibility”..................17

3.5.1 Environment................................................173.5.2 Corporate Responsibility Status Report 2012................19

3.6 Future challenges............................................193.6.1 PESTLE analysis............................................20

3.6.2 SWOT analysis..............................................213.7 Recommendations..............................................21

3.7.1 Short term strategies......................................223.7.2 Long term strategies.......................................23

4.Conclusion.......................................................23II. Bibliography....................................................24

Table of Tables and Figures

Figure 1: Shareholder Structure by type,...... Figure 2: Shareholder Structure by Region 7Figure 3: Structure of Commerzbank Group as of 31 December 2011......8Figure 4: Subsidiaries...............................................9Figure 5: Financial Performance......................................9Figure 6: Issue Area Coverage(self-assessed): Report on Corporate Social Responsibility Status by UN Global Compact...................12Figure 7: Strategy and Business model of Commerzbank................13Figure 8: CO2 Emission...............................................17Figure 9: PESTLE Concept ...........................................20Figure 10: SWOT Analysis of Commerzbank.............................21Figure 11: The "New Normal".........................................22

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Table 1: Resources of Commerzbank...................................10Table 2: VRIO Analysis..............................................11

Affidavit / Eidesstattliche Erklärung

I declare that I wrote this thesis independently and on my

own. I clearly marked any language or ideas borrowed from other

sources as not my own and documented their sources.

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I am aware that any failure to do so constitutes plagiarism.

Plagiarism is the presentation of another person's thoughts or

words as if they were my own—even if I summarize, paraphrase,

condense, cut, rearrange, or otherwise alter them.

I am aware of the consequences and sanctions plagiarism

entails. Among others, consequences may include nullification of

the thesis, exclusion from the BA program without a degree, and

legal consequences. These consequences also apply

retrospectively, i.e. if plagiarism is discovered after the

thesis has been accepted and graded.

Students: Hamlet Hayrapetyan, Waqas Hasan, Ali Ibrahim

Title of our paper: Strategic Audit and Future Strategic

Challenges of Commerzbank AG

Date: 25/01/2013

Signatures: __________ ___________ ____________

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I. Analysis

i. Hypothesis"Can Commerzbank stand the bloody competition due to the red

ocean strategy?"

1. Introduction

In 1870 by merchants, merchant bankers and private bankers

found the "Commerz- und Disconto-Bank" in Hamburg in the form of

a joint-stock company1, 140 years later it went on to become

second largest bank in the Germany with the biggest online

banking system. Commerzbank did not just wanted to grow in

Germany, it wanted to become global. For that purpose Commerzbank

was the first German bank to open a branch in New York. It has

also laid foundation of Commerzbank securities in 2004, which

lead to huge loss in the crisis of 2008 and it was time to go

down.

Crisis in 2008 changed the way we looked at big banks. It

hit almost all the big banks in the world, Commerzbank was one of

them. Share price dropped from 37 to about 1.6 Euros2 losing more

1https://www.commerzbank.com/en/hauptnavigation/konzern/geschichte/1870_bis_1923/1870_bis_1923.html2http://uk.finance.yahoo.com/echarts?s=CBK.DE#symbol=cbk.de;range=my;compare=;indicator=volume;charttype=area;cross

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than 95% in value. The bank was in the verge of bankruptcy and

had to be bailed out by €18.2 billion3 of tax payers money.

Banking world was never the same again . It called for change in

strategies.

Commerzbank reacted to this paradigm shift by reducing

risks and making a strong base. It was the time of strict cost

management and focusing on the banking sectors rather than

looking left or right, it was the time to change business model

to customer-oriented bank.4

When somebody picks up the balance sheet of a bank

investments, it is the highlight of the show. Change in

investment strategies was also required and it was time to focus

on real economy instead of making money out of thin air. This

means stopping to invest in public personal finance and also real

estate sectors. It was time to do core banking.

Results was core banking experience which is divided into

5 segments:

Private Customers (Increasing base): More than 11 million

Private and business customers headed by more than 10000

consultants in 1200 branches

Mittelstandsbank (target Small and medium corporate

customers ): Serving more than 10000 small and medium size

hair=on;ohlcvalues=0;logscale=off;source=undefined;3 http://www.bloomberg.com/news/2013-01-24/commerzbank-to-cut-4-000-6-000-jobs-by-2016-to-meet profi.html4https://www.commerzbank.com/en/hauptnavigation/konzern/commerzbank_im__berblick/strategie___gesch_ftsmodell/Strategie___Gesch_ftsmodell.html

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Corporate customers in about 150 location in Germany and

nearly 60 locations outside Germany

Central and East European(Expansion): Over 4 million

customers making it one of the leading banks in the region.

Corporate and Markets (investments Playing safe): Investing

in safer Germany equities, DMC products and in the delivery

of international risk management solutions.

Run down Segment (getting out of old investments): Non-Core

Assets Getting rid of Portfolios, that are not part of the

core business over time to create space.5

Combination of these Segments gave a new strategic direction and

tradition to Commerzbank, which is once again to fulfill the sole

purpose for which it was created to perform Core banking with

customer as its priority. Commerzbank tries to define its new

strategy in a new marketing campaign, “Germany needs a bank that

doesn’t just carry on like before. We are the bank on your

side”6. The part of the new strategy of Commerzbank was

branding:

Brand positioning: Explains the principle on which the bank

was created fairness and competence.

Brand promise: "The bank on your side”

Logo: shows the merger of two German traditional banks

innovating5https://www.commerzbank.de/en/hauptnavigation/konzern/commerzbank_im__berblick/strategie___gesch_ftsmodell/strategie_geschaeftsmodell2.html6 https://www.commerzbank.com/en/hauptnavigation/konzern/die_marke_commerzbank/marke.html

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Corporate design: To perform uniform image.

All this was done to take Commerzbank to new heights in post 2008

world.7

2. Company and industry analysis

2.1 Description of the company

Commerzbank AG is a public limited company (AG) under German

law. As at 31 December 2010, just over half of all shares in

Commerzbank were held by institutional investors; the rest were

accounted for by private investors (predominantly domiciled in

Germany) and the major shareholders Allianz, Generali and the

Financial Market Stabilization Fund (SoFFin).

Figure 1: Shareholder Structure by type Figure 2: Shareholder Structure by Region

7 https://www.commerzbank.com/en/hauptnavigation/konzern/die_marke_commerzbank/marke.html

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The registered office of Commerzbank AG headquarters is

situated in Frankfurt am Main, Kaiserplatz, Germany.8 Number of

employees according to Q3 2012 is 56,287 people.9

The organizational structure of the company is very well

shown in the Figure 3. The main governing body of the Foundation

is Board of Managing Directors after which are coming the

Managing Directors of different Segments and them follow the

Coordinators of Operating units, e.g. Human Resources and

Integration, Risk Management, etc.

In 2008 and early 2009, the bank received capital support

from SoFFin and Allianz, including: (a) placing silent

participations in two tranches totaling €16.2 billion; (b)

issuing €1.8 billion in newly subscribed capital, providing

SoFFin with a 25% plus one share stake in Commerzbank AG; and (c)

issuing an additional €0.75 billion silent participation as part

of the transaction with Allianz. In April 2011, the bank

announced that it would repay €14.3 billion of the €16.2 billion

outstanding, and successfully closed the transaction in early

June 2011. This resolution was passed in May 2011 and included:

(a) a €8.25 billion new share issue; (b) conversion of €2.75

billion of SoFFin’s silent participation into common stock; and

(c) a repayment of SoFFin’s silent participation of €11.5

billion. As a result of these steps, the government maintains its

8 http://nachhaltigkeit2011.commerzbank.de/reports/commerzbank/annual/2011/nb/English/5040/profile-disclosures.html?printDoc=19https://www.commerzbank.de/en/hauptnavigation/konzern/commerzbank_im__berblick/zahlen___fakten/fakten.html

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current stake of 25% plus one share, with only €1.6 billion of

the state aid remaining. The bank intends to repay this by

2014.10

Figure 3: Structure of Commerzbank Group as of 31 December 201111

As of 30 June 2012, the bank’s major subsidiaries were as follows:10 Company Reports (annual report 2011, interim report Jun 2012, consolidated financial statements Dec 2009), Company data, Moody’s research, www.bafin.de11 Moody's Investor Service, Mira Carey and Katharina Barten, October 19, 2012, Page 13: https://www.commerzbank.de/media/aktionaere/zahlen_fakten/2012-Oct-19_-_CP_CoBa.pdf

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Figure 4: Subsidiaries12

The facts and figures of the company show the financial performance in the Figure 4:

Figure 5: Financial Performance13

12 Moody's Investor Service, Mira Carey and Katharina Barten, October 19, 2012, Pages 7,8: https://www.commerzbank.de/media/aktionaere/zahlen_fakten/2012-Oct-19_-_CP_CoBa.pdf13https://www.commerzbank.de/en/hauptnavigation/konzern/commerzbank_im__berblick/zahlen___fakten/fakten.html

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2.2 Analysis of resources and capabilities

Strategy of the firms depends on resources and capabilities

that the firm has. The ability and capacity of the firm in sense

of human resources, tangible and intangible resources. Doing

analysis on Commerzbank resources we find out that it has strong

capabilities and power to expand them in different ways. Big

number of branches all over the world, the best online banking

system, a lot of sponsorships in different fields, their

financial position and many other resources bring into a point

where we see that Commerzbank has a capability to be more known,

build stronger image, attract more customers, make the

competition tougher and due to its strong position in the field

it has the ability bring new approaches and vision to the

financial sector.

We tried to group their Resources, which is shown in the Table 1.

The resources presented in the table are all the resources, only

the ones that we think are the most important ones.

Table 1: Resources of Commerzbank

ResourcesTangible

1477 Branches Financial

Position Headquarters in

Frankfurt Commerzbank Arena Awards

Intangible Online Banking Brand Goodwill Cash Flow

Software Sponsorships Culture

Human Culture of

Organization Stability Highly Skilled

Professionals Motivation Professionals

from different industries

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Taking a look on the resources of the company we started

analyzing the value proposition and competitive implications of

Commerzbank with the help of VRIO analyses. It shows that all the

above mentioned resources bring to sustainable competitive

advantage as the is no any important resource that is

undervalued. Using their human resources in the right way, in the

right places and in the right time brings to strong

organizational capabilities. Commerzbank understands that their

Brand is one of the first with its importance, that is why they

use nearly all the ways of marketing and reaching the name to

customer, even some very expensive ones, like being a sponsor for

FFC Frankfurt and Eintracht Frankfurt, up to the "Girls

Wanted" initiative and the Drumbo-Cup, Germany's largest indoor

football tournament for the primary schools of Berlin.14

Table 2: VRIO Analysis

Value? Rare? Difficult to Imitate?

Organization exploits it?

Potential Value proposition?

Online Banking

Yes No Yes Yes Above Average Value

Branches Yes No No Yes Limited Value

Financial Position

Yes No Yes Yes Above Average Value

Headquarter Yes Yes Yes Yes High Value14 https://www.commerzbank.de/en/hauptnavigation/konzern/sponsoring/Sponsoring.html

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s in FrankfurtCommerzbankArena

Yes No No Yes Limited Value

Awards Yes Yes Yes Yes High ValueBrand Yes Yes Yes Yes High ValueGoodwill Yes Yes Yes No Above

Average Value

Cash Flow Software


Sponsorships


Culture Yes Yes No Yes Above Average Value

Stability Yes Yes Yes Yes High ValueProfessionals from different industries/Highly Skilled


Motivation Yes Yes Yes Yes High ValueCulture of Organization

Yes Yes Yes Yes High Value

2.3 Industry Analysis: Commerzbank Strategic position

The most important thing for every commercial bank in the

world is to have customer trust. Commerzbank is not an exception

and like the other banks it is based on trust building strategy.

Trust building is, first of all, directed to private customers,

which is the main strategic segment for them. All the value chain

activities, creation of values, reaching competitive advantage is

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done to bring more customer benefits, have low costs, create high

economic value, have more economic profit and satisfy consumers

needs. To understand how the strategy should be, it is important

to define key success factors: customer wishes and industry

competition. To survive or drive the competition, companies

develop different strategies for how to deliver their goods and

services to customers and have more competitive advantage than

their competitors.

The main segments that banks compete in, are Private

Customers, Private Banking Customers, Corporate Customers. For

each of the segment different services are developed and created.

In the competition, banks offer same services with different

customer benefits and different cost. Of course it is important

for the company to have low costs but from other side it is very

important, especially in commercial banking sector, to give high

economic value. Because of these approaches, we understand that

banks should use cost leadership and differentiation strategies

and they actually use them. From the segments described above,

Commerzbank created more specific sub-segments, e.g. young people

from 18 to 25 years old, get Start-konto and it is totally free

for them, people with monthly income 1200+ Euros get Kostenlose

GiroKonto which is also free for the customers, etc. Thus, we see

that cost leadership and differentiation strategies are used to

attract customers.

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As we already mentioned, the banking world totally changed

after 2008, but like before, the important thing for the banks

are customers. Time changes the strategy as it also changes

customer needs but anyhow cost leadership and differentiation

strategies are the primary ones that are being used by banks and

especially Commerzbank. During the latest years and now

Commerzbank is working to improve and develop their image,

competitive advantage, resources and capabilities. Commerzbank

was always very active in Corporate Social Environment and being

environmentally friendly, as The Commerzbank Tower was the first

Ecological Skyscraper in Europe, the UN Global Compact Report on

Corporate Responsibility Status 2012 shows that Commerzbank AG

covered Human Rights, Anti-Corruption, Environment and Labor

areas nearly perfectly, that it met all the 24 criteria for the

GC(Global Compact) Advanced level.

Figure 6: Issue Area Coverage(self-assessed): Report on Corporate Social Responsibility Status by UN Global Compact

Nowadays Commerzbank continues its forward moving strategy and

the combination of main generic strategies help him in on the

way.

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The nowadays business model and strategy of Commerzbank is

shown in the above figure:

Figure 7: Strategy and Business model of Commerzbank15

2.3.1 Comparative study: Market Segments and Competition analysis

As we have mentioned above, Commerzbank, besides default

strategic segments, created concrete sub-segments and not only

Commerzbank, but also other banks. We chose the following segment

group to compare, as they have similar approaches and are the

main competitors in the industry:

"Comdirect.de

Free GiroKonto which pays €1/month and earns 0.25 percent

interest. No fee if 1,250/month is deposited. Otherwise,

15https://www.commerzbank.de/en/hauptnavigation/konzern/commerzbank_im__berblick/strategie___gesch_ftsmodell/strategie_geschaeftsmodell2.html

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€4.90/month. Student GiroKonto free with either a €25 signing

bonus or the BahnCard 25. No minimum balance required.

Sparkasse (Berlin)

Direkt (online only), Classic & Brilliant accounts: €3.50, €7 and

€13/month respectively. Students under 30 can get a Startkonto

free; students over 30, €3/month. Startkontoplus, for those under

30, €3/month. Startkonto Plus allows customers to withdraw €2,500

or 2 months net income out of your account as credit.

No minimum balance required.

Commerzbank

Kostenlose GiroKonto: No fee if €1,200/month deposited. Komfort

Konto: €7.90/month; Aktiv Konto (online only) €4.90/month.

Students: Start Konto free.

No minimum balance required as long as you have a monthly deposit

made to the account. No minimum balance required.

Deutsche Bank

Three accounts ranging from €4.49 to €9.99/month; Students under

30, free. No minimum balance required.

Hypovereinsbank

Two main types of Girokonten -- Willkommenskonto (3 kinds) and

GirokontoPlus (2 kinds). Willkommenskonto is free.

WillkommenskontoStart is for those up to 30 and is also free.

Also has Willommenskonto Start (for students) and Komfort

version. For GirokontoPlus, it is necessary to maintain an

average of €1,500 per quarter in your account otherwise the

account costs €5/month.

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Citibank

Five different types of Girokonten, 3 with monthly fees. Citibest

is free and a minimum of €2,500 needs to be in your savings,

investment or checking account combo at all times. The account

earns up to 3.25 percent interest per year. Also, City Plus is

€6.60/month and the Einzelabrechnungskonto is €9.90/month with no

monthly income required. Students: City One, free.

Postbank

GiroKonto Plus: free with €1,250 deposited monthly, otherwise

€5.90/month. GiroKonto Extra: free with a €3,000/month deposit.

Students under 27: free GiroStart account."16

Seven different banks in one strategic group, same strategic

segments, nearly the same products and services offered,

different strategies to attract customers but all in all the low

costs and product differentiation stays in the first place.

3. Strategic Position for the future: What will be

3.1 New brand promise: “The bank at your side”

The main purpose of the new brand name and new market

department starting their work on November of the year 2012 is to

establish new way of modern banking that combines the new

technology and utilities with the traditional way of banking

which at the end can deliver best service to the bank customers.

16 http://www.expatica.com/de/finance_business/banking/banking-in-germany-a-survey-of-products-and-services.html

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One of those traditional aspects is the brand vision used by

Commerzbank from 1977 until 2002, which was “fairness and

competence” which is again going to be used in the next years

according to the new strategic agenda until 2016 by the new

Commerzbank17 .

3.2 Strategic milestones of “Roadmap 2012”

The main two focuses of the new strategy were “Establishment

of a (client-centric bank) with profitable core business areas”

and “Substantial downsizing of investment banking and enhanced

client-orientation” and were actually achieved by Disposal of

non-strategic subsidiaries, e.g. Kleinwort Benson Private Bank

Ltd. Bankhaus Reuschel & Co. KG, Dresdner VanMoer Courtens.

For the year 2012 Commerzbank had so much to do, one of the

optimizations was to “Re-dimensioning asset-based credit

business” and this could be achieved by reduction of assets:

Public Finance1 by 49% to €80bn, Commercial Real Estate1 by 44%

to €49bn.18

3.3 Main goals to be achieved by 2016

Commerzbank 2016 strategy put clear goals to be achieved in

the different market segments, which they covers. In the private

customers segment the main goal is to maintain the customer

relationship throw “Flexible multi-channel bank with traditional

values”. For the Mittelstandsbank segment is to “Continue to be

long-term strategic partner to Mittelstand at home and abroad”.17 "New Commerzbank" refers to the integration of Commerzbank and Dresdner bank 201018 Strategic Agenda of Commerzbank: General presentation November 2012

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In the corporate customers segment is keeping on being,

“Internationally successful niche player focuses on client-

centric business”. Main goal to be achieved in central and

eastern European market segment is to have “Leading market

position in Poland consolidated further“. Finally in the non-core

assets segment “Rundown portfolios by more than 40%”.

3.4 Risk Minimization

As investing bank main challenging is always how make most

profit and with lowest percentage of risks including and

according to analysts and previous studies and models this can be

throw different ways one of them outsourcing.

3.4.1 Global outsourcing

In order to minimize risk within investment Commerzbank is

always trying to conquer new markets to invest and that was clear

to all of us their strategy of expanding in the previous years in

eastern European countries as well as Abu Dhabi and also Asian

countries.

For banks outsourcing is different from textile industry or

even IT services because banks are not only looking for profit

maintaining through decreasing the cost for example by lower

wages in those countries, but the idea in this sector is

different of course they can also benefit from lower wages but

the main reason is decreasing their risk of investment by

expanding in different market in case if one is not doing well

they can still get support from other market and great practice

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of that is during financial crisis the Asian market was not

affect because they were not mainly depending on US dollar as

well as the Middle east which was affected after worth as domino

effect but they could survive it.

3.4.2 Different markets and industries

After the financial crisis of 2008 banks had tough lesson

from real-estate industry investment, however they did not

totally went away from this sector but decreasing it was clearly

appearing in the last year as well as the interest rate relating

to it. In order to reduce the risk and in same time make profit

Commerzbank was forced to establish business in new industries

including IT industry and business consulting as two main focuses

supporting medium sized businesses are also included.

3.5 Image “CSR Cooperate Social Responsibility”

Every two years Commerzbank their report of cooperate social

responsibility and the main reason for that is not actually their

responsibility toward the environment but it is one of the main

topics, which can maintain the position and image of any company

or institution.

3.5.1 Environment

“Commerzbank was able to expand its pioneering role during

the period under review with a high volume of new business. A

good example of our work are the projects conducted under the

“Solarparc Deutschland I” public fund offered by Solarparc AG.

The solar fund consists of four turnkey solar parks in Bavaria

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with an installed capacity totaling just less than 31 MWp.

Commerzbank provided financing in the amount of €74.2m for this

project. The investment volume of the fund was €103.5m.”19

Figure 8: CO2 Emission

In the

following

figure it is

shown the

carbon dioxide

emission

statistics .In

April 2010,

the

environmental

management

system of the

new

Commerzbank AG

was

successfully

re-certified

for all

locations in Germany. The environmental management system in

19 CSR report 2010: https://www.commerzbank.de/media/unsere_verantwortung/engagement/Commerzbank_CR_Statusbericht_2010_en_pp.pdf

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accordance with ISO 14001 aims to ensure a process of continuous

improvement controlled by key indicators to increase

environmental performance. The system is subject to an external

audit by the accredited certification company Det Norske Veritas.

As part of this extensive audit of 18 locations (random sample)

and 18 central departments with particular environmental

relevance, Det Norske Veritas identified only two deviations from

the required standard, which Commerzbank was able to resolve

straight away. And this gained certificate is available for three

year and to be renewed upon new test after the end of current

period. This can of course maintain the position Commerzbank as

it gives great image of the company, which is responsible for our

environment as much customers may think20.

3.5.2 Corporate Responsibility Status Report 201221

Reflection on the relevance of environmental stewardship forthe company

Written company policy on environmental stewardship

Inclusion of minimum environmental standards in contractswith suppliers and other relevant business partners

Specific commitments and goals for specified years

Reference to relevant international conventions and otherinternational instruments (e.g. Rio Declaration onEnvironment and Development)

20https://www.commerzbank.de/media/unsere_verantwortung/engagement/ Commerzbank_CR_Statusbericht_2010_en_pp.pdf

21 http://www.unglobalcompact.org/COPs/advanced/19993

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http://www.unglobalcompact.org/COPs/advanced/19993

https://www.commerzbank.de/media/unsere_verantwortung/engagement/Commerzbank_CR_Statusbericht_2010_en_pp.pdf

https://www.commerzbank.de/media/unsere_verantwortung/engagement/Commerzbank_CR_Statusbericht_2010_en_pp.pdf


Environmental risk and impact assessments

Assessments of lifecycle impact of products, ensuringenvironmentally sound end-of-life management policies

Allocation of responsibilities and accountability within theorganization

Internal awareness-raising and training on environmentalstewardship for management and employees

Grievance mechanisms, communication channels and otherprocedures (e.g. whistleblower mechanisms) for reportingconcerns or seeking advice regarding environmental impacts

indicators on the development and diffusion ofenvironmentally friendly technologies

Publicly stated formal policy of zero-tolerance ofcorruption

Human Resources procedures supporting the anti-corruptioncommitment or policy, including communication to andtraining for all employees

3.6 Future challenges

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3.6.1 PESTLE analysisAccording to

PESTLE analysis( Figure 9: PESTLEConcept ), thechallenges are alot, which is goingto be face byCommerzbankinternally andglobally first isthe politicalenvironment of theinvestment andexample of that iscutting investmentsin markets like Libya, Egypt and Tunisia due to unstable political environment there. Second is economic changes and problems on this heading comes the

EuroZone crisis and how government may react to it and avoid

bankruptcy of countries like Greece, Spain, Portugal or Ireland.

Third challenge is Regulations and laws in different

countries which Germany nowadays waiting to face a massive change

within the upcoming months.

Fourth challenge is very important for banks as it is

related to the customers who are the main player in banking

sector so change in customers behavior and needs shall be

consider in order not to lose them as well as attracting new

ones.

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Technological changes has to be considered as well in order

to facilitate the banking processes as possible including

mobility and reachability.

As in the previous paragraph the environment and social

responsibility shall be considered as it maintains the

organization image inside the market and can attract more

customers who are keen on environment.

3.6.2 SWOT analysisAccording to the following figure ( Figure 10: SWOT Analysis of

Commerzbank ) the main strengths of Commerzbank is that they are

the second bank in Germany, having 1477 branches and subsidiaries

almost all over the world is also one of the main strength they

have the brand name which is known as one of the best banks since

one hundred forty years plus that they were pioneers or

Strength Postion

CSRBranches and subsidariesOnline banking Brand

Weakness Presence

globally Tough compition

Oportunities New

marketsCoopreation

Threats Regulation

Eurozone crisis

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introducing online banking database and still one of the best

online databases.

However, Commerzbank has good global presence but in some

markets as Asian and Latin America as well as the tough

competition between Commerzbank and main rival deutsche bank and

Sparkasse in the German market.

Some opportunities for Commerzbank according our SWOT

analysis is expanding is some new markets that may include Middle

East and Asia. They can also cooperate with some other banks

either inside Germany or globally to facilitate the customers

financing process.

Threats, which are taking the mind of Commerzbank

administrations, can be the new investing regulations as well as

the upcoming European crisis, which can explode in one day so

they should be aware and able to avoid that.

3.7 Recommendations As Germany second bank they have double target first is to

keep the current position and not to lose their market share and

second is to maintain their selves in order to become leading

bank in Germany and may in Europe as well and this cannot be

achieved without clear strong strategy with some short term goals

and long term goals as well.

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As in the banking sector the challenge is so tough and is market

is affected by the red ocean strategy Commerzbank has to get away

from this bloody challenge by offering new services or even the

same services but by putting new technology which can maintain it

which can take the Commerzbank from the bloody competition of red

ocean to new strategic position applying blue ocean strategy, and

then cannot happen unless they became different from their rivals

and more innovative and this can be achieved our Next steps to

have differentiation strategy. And putting in consideration the

three main challenges in the next figure. Figure 11: The "New Normal"22

22 Internal Source: Strategische_agenda_coba.pdf, Frankfurt, November 2012

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3.7.1 Short term strategies Expanding in Asian and Middle East

More offers for small and medium size investors

Cooperate with smaller banks in Germany

Have more alliances globally

Keep CSR and environment friendly

Questionnaires for customers satisfaction

Use social Media network for communication with customers

Attach to long-standing commitment to universal banking model

3.7.2 Long term strategies Conquer new industries of investment away from real estate

Create regional business plans to guide policies across

different levels of government

Authorize a Green Bank; Fully fund and implement the Green

Bank and Infrastructure Bank

Create strong cooperation with leading research universities

Consider the importance of Germany and the regional growth

focus in Asia and the Latin Americas markets

Positions itself at the forefront of cultural change in the

industry

Accelerates deleveraging by creating Non-Core Operations

unit Setting financial aspirations “maintain core banking ”

Internal competition between employees to give their best

and show more creativity

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4. ConclusionHaving observed Commerzbank history, strategic position,

products and services, comparison with the competitors, resources

and capabilities, strategic approaches, we found out that in

nowadays existing competition Commerzbank should avoid bloody

competition and adopt blue ocean strategy to gain more

competitive advantage and maintain its position in the future

market. We believe that their strategic vision and approaches for

the future should be succeeded according to the Milestone 2012,

which was 100 percent achieved. Commerzbank has strong Human

Resources and motivation and it is the key of achieving the

heights that they have recently achieved. As far as all the

strategies are applied and goals are achieved customer

satisfaction remains the most important goal of Commerzbank AG.

II. Bibliography

1. Banking in Germany: A survey of products and services:http://www.expatica.com/de/finance_business/banking/banking-in-germany-a-survey-of-products-and-services.html

2. Bloomberg News: http://www.bloomberg.com/news/2013-01-24/commerzbank-to-cut-4-000-6-000-jobs-by-2016-to-meet profi.html

3. Commerzbank history: https://www.commerzbank.com/en/hauptnavigation/konzern/geschichte/1870_bis_1923/1870_bis_1923.html

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4. Commerzbank Share Price: http://uk.finance.yahoo.com/echarts?s=CBK.DE#symbol=cbk.de;range=my;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;

5. Company Reports (annual report 2011, interim report Jun 2012,consolidated financial statements Dec 2009), Company data, Moody’s research, www.bafin.de

6. CSR report of Commerzbank, 2010: https://www.commerzbank.de/media/unsere_verantwortung/engagement/Commerzbank_CR_Statusbericht_2010_en_pp.pdf

7. Facts & Figures of Commerzbank: https://www.commerzbank.de/en/hauptnavigation/konzern/commerzbank_im__berblick/zahlen___fakten/fakten.html

8. Moody's Investor Service, Mira Carey and Katharina Barten, October 19, 2012

9. Profile disclosures of Commerzbank:http://nachhaltigkeit2011.commerzbank.de/reports/commerzbank/annual/2011/nb/English/5040/profile-disclosures.html?printDoc=1

10. Sponsorships of Commerzbank: https://www.commerzbank.de/en/hauptnavigation/konzern/sponsoring/Sponsoring.html

11. Strategic Agenda of Commerzbank: General presentation,

November 2012

12. Strategy & business model of Commerzbank:

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https://www.commerzbank.com/en/hauptnavigation/konzern/commerzbank_im__berblick/strategie___gesch_ftsmodell/Strategie___Gesch_ftsmodell.html

13.UN Global Compact CSR Report, 12.12.2012: http://www.unglobalcompact.org/COPs/advanced/19993

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Strategic Management - Strategic Audit and Future Strategic Challenges of Commerzbank AG

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