Julia Pires

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Introduction to Management!

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ANZ Bankin Group

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Globalisation Process

Student: Julia Maia Pires

Student ID: 3495687
Word count: 1900
Tutor: Stan Stapar
Tutorial Location: 080.04.018
Time and date: Wedn. 4:30pm-5:30pm!

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Julia Pires

INTRODUCTION!

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In the last years, many companies, such as the ANZ Banking Group, started to seek
for globalisation. This is a relatively new term and it has been used in different ways by
different authors. According to Campbell (2010), globalisation is a complex web of social
processes that intensifies and expands worldwide economic, cultural, political, and
technological exchanges and connections. The finance industry is in constant change,
which poses many implications for companies who want to become global, but it also gave
companies like ANZ, many reasons to participate in foreign markets. Some of this reasons
include increased competitor saturation of domestic markets, advances in technology and
better foreign economic conditions. !

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In 2008, ANZ had to adopt a new management model because of the global financial

crisis. After the stormy weather, the banking corporation started to use the super regional
strategy model, of which one of the main goals was to refocus Management, People and
Culture to increase capital growth, (Edwards 2008), in the Asia Pacific. One of the most
important things to do in order for the new model work was to understand and explore the
cultural values of the region. The key determinants for the success of ANZ in Asia Pacific
will be discussed in this essay, showing how its growth after the global crisis was a result
of adaptation of the company to the regional values.!

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KEY DETERMINANTS FOR ANZ SUCCESS IN ASIA PACIFIC!
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When companies first start to expand globally, there are a lot of variables to be
studied. The company has to adapt in the foreign environment, get to know the host
country as much as they can. One of the most important variables it is the religion.
Understanding the religions and how it shapes the behavior of a nation was a key
determinant of ANZ successful globalisation model. The most religiously diverse nations
are in the Asia Pacific region. According to Hill (2011) in the religious map, there are 4
main religions in the Asia Pacific regions: Christianity, Hinduism, Islam and Confucianism,
and all of them have different beliefs and values that have to be thoroughly understood by
the management teams. If not, it could cause problems to ANZ, both economic and
physical, knowing that the religious beliefs of a certain nation build its entire culture. !

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Christianity is the worlds biggest religion with about 2.1 billion followers. The
religion promotes a protestant work ethic and its implications can economically affect ANZ.
If, for example, theres a situation with an unhealthy work environment, unfair conditions or
any other issue and it leads to a protest, it would reduce the profitability of the company.
Hinduism in known as the oldest religion in the world and has over 900 million adherents
world wide. It is the religion of the majority of people in India. According to Hill (2011)
hinduism cultural values and beliefs do not encourage entrepreneurial activities promoting
a form of protestantism, which could cause instability in the work environment. Muslims
(which is how an adherent of Islam is called), believes that worshiping God is the purpose
of their existence. Islamic law provides guidance in almost every topic in a muslim life,
from welfare and banking, to family life and environment. Everything that threats their
beliefs and laws could be in danger, including multinational companies in countries that
follow this religion. The safety of the customers and workers could be affected and it would
leave ANZ in a delicate position. Developed from the teachings of the Chinese
philosopher, Confucius, the confucianism is followed by people in China, Japan Korea and
Taiwan. According to Hill (2011), the confucian ethic values honesty, what would promote
less conflicts and lies in the work environment.

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Another important variable for ANZ success in the run to become global is the legal
and political environment in the countries that they want to go in. Like the religions, there
are several types of political and legal systems in the Asia Pacific region. In China, for
example, ANZ would be successful due to the region current political system, that is based
on a communist approach to socialism, which, according to Hill, Cronk and Rumintha
(2014), is defined as the belief that state ownership of a countries means of production,
distribution and exchange so that all can benefit, and communism is the belief that
socialism can only be realized through violent revolution and totalitarian dictatorship, since
the bank corporation was built from capitalism and imperialist approaches to work. ANZ is
building a more culturally diverse workforce by hiring local workers, generating more
profits for the organisation because their customers are being served by their local
population (Sun, 2013). !

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The education of the host country is also a very important variable for ANZ
expasionary strategy. The education level is an important determinant of regions level of
economic prosperity. Cooray (2009) suggest that, lower the education level in a certain
region, lower the average income level in that region. Which means that the level of
education it is linked to the level of economic success in a nation. Economic growth could
be slowed down because of the lower level of income, as the lack of high salaries and job
supplies would increase the number of loans that are not being paid back (Stewart 1996).
Also, the employment of unskilled workers can affect the efficiency and create an hostile
work environment, affecting ANZs profits. In the other hand, long-benefits to ANZ could be
provided as local workers understand the nation.!

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Technological change is the benefit production methods by developing new
technical advancements (Dictionary.com 2014) and it is another key determinant for ANZs
run for globalisation in the Asia Pacific region. Technology promotes positive changes in
the work environment such as increased profitability and work force efficiency. The use of
internet, for example, is promoting better relations between costumer and worker, by
putting internet banking online, the company is decreasing customer service time,
reducing waiting time. There are some high technological countries in the Asia Pacific
region and they use the technology to improve the lives of the population and to promote
national wealth.!

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ANZ Banking Corporation (2014) states that today the organisation! has, over 2.6
million customers in Asia Pacific supported by around 8,200 employers and 100 branches
and points of representation, however, the company still have some problems created by
its globalisation process. The organisation recognises that their decisions can have
impacts on communities and the environment and it is their obligation to make sure those
decisions are based on sound social and environmental standards (ANZ 2007).!

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One of the problems was revealed in 2006, when a community group from Papua
New Guinea and Australia (Australian Conservation Foundation, the Human Rights
Council of Australia and three Papa New Guinea community groups: the Environmental
Law Centre, the Centre for Environmental Law and Community Rights (CELCOR) and the
Papua New Guinea Eco-Forestry Forum) filed an complaint alleging that ANZ is actively
facilitating and supporting the Papa New Guinea operations of Malaysian logging giant
Rimbunan Hijau, a company whose operations involve serious human rights abuses,
environmentally devastating logging practices and repeated, serious illegal
conduct. (Australian Conservation Foundation, 2006). Papua New Guinea is one of the
poorest countries in the world which means regulations and laws are less
protective,.According to the ACF Legal Adviser, Charles Berger, ACF would like to see the

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same commitment in Papua New Guineas operation, since ANZ had some great progress
on becoming a responsible corporation in Australia and dealing with corporate recidivists
like Rimbunan Hijau should be a no-go zone for the bank. !

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ANZ claimed that the company is currently developing a Forests Policy which will
provide greater transparency about how ANZ approaches transactions that have the
potential to impact on forests. ANZ has consulted widely on the drafting of the Policy with
government, environmental NGOs, timber industry representatives and clients. (ANZ
2007). The Policy will go beyond the legal minimum in nation where ANZ is establish and
specify practices that would not be supported by the banking company. When finalised, the
Policy was applied to new and existing clients. !

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A new problem was revealed in the beginning of this year, when it was disclosed
that the banking giant was financing a Phnom Penh Sugar Companys plantation in
Cambodia that was related to child labour, military-backed land grabs, forced evictions
and food shortages ( Baker and McKenzie 2014). Serious questions about the bank were
raised, since they have their own code of conduct and seem to be so faithful to it. Back in
2010, in order to make way to the sugar crop, more than 1000 families were compulsorily
taken out of their homes and lands which provided them livelihood and food. As
compensation they received $100. Now, the bank is no longer financing the sugar cain
mill, but it is still receiving calls for compensation over the lands taken. Also It is believed
the bank had put in place an action plan to help Phnom Penh Sugar improve its
performance in addressing its social and environmental obligations, but that Phnom Penh
Sugar decided to pay out its loan (Winkins 2014). After what it is known as the blood
sugar episode, ANZs reputation towards the media and its consumers was trashed. It is
estimated that that bank has loaned $10 million to Phnom Penh Sugars project in
Canbodia. ANZ has not spoken about it yet.!

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CONCLUSION!
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ANZ is one of the four biggest banks in Australia and it has 32 branches throughout
Asia Pacific, Europe, America, Australia, New Zealand and Middle East. After the global
financial crisis, during its globalisation to Asia Pacific, ANZ followed a super regional
strategy model. It was based on refocusing management, people and culture to increase
capital growth in the region. Understanding the culture and religion of the other countries
was one of the essential points of the companys successful globalization process. They
tried to really understand and help the communities they were in and fit in the cultural and
religious values. The company has also adapted to fit in the legal and political environment
of the host country and to follow the technological changes improving the working
environment of the local workers.!

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Even though the company had it all planned, a few things didnt work out as well as
they hoped for. Some of the organisations investments were against major aspects, as it
was reported. The banking company faced some legal, ethical, cultural and diversity
problems. Both of the problems cited in this paper happened in poor countries where laws
and regulations are less protective and with a loosen tendency. !

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In order to internationalise, a companys manager has to always be updated about
the host county and know what is the best strategy to follow within that specific region.
Being involved in what could become a scandalous activity doesn't add anything to the
company. It only makes the oragnisation lose its credibility. Even after making the right
adjustments, what the company did wrong, will not be forgotten.!

Julia Pires

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Tutor: Stan Stapar

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Word count: 1832
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