Introduction
The recent entry of new competitors into retail banking has resulted in major changes in the industry since the competitors focus on offering telephone and online banking services. Due to the lower cost bases and desirable rates and levies offered by these new competitors, conventional banks are under pressure to change and become more competitive. An established bank is competing against competition from an emerging firm. The management board of a traditional banking institution needs help understanding the rivalry’s possible effects on its market share and profitability. Being part of the operations board requires thoroughly assessing the issue and providing practical solutions to keep the traditional bank profitable. Reducing the size of the current network of branches is one method that could be utilized to decrease expenditures and boost earnings per customer. Nevertheless, the specifics of this action plan need to be properly thought through, including plans to close branches and ensure that the shutdown will not negatively impact customers.
In the case study, it is crucial to thoroughly study such stakeholder perspectives and power dynamics and recognize any potential obstacles to implementing the branch closure strategy. It will be easier to create an interaction and participation plan that addresses each stakeholder organization’s needs and issues, fosters teamwork, and creates trust if you know their interests, problems, and objectives. The table illustrates how to create this communication plan in the presentation. The paper lists the important stakeholders, their interests, their communications objectives, the means of communication and operations, the leaders of the participants, and the schedule and duration of involvement.
Analysis of the Stakeholders
(i) Stakeholders in the Case Study
The case study explores a traditional banking institution’s competition from the new entrants . In this scenario, new entrants to the banking industry have acquired high-street branches and offer highly specialized Internet and telephone banking services.
The executive board of the traditional bank is occupied with several significant initiatives. It must be made aware of the possible effects of new rivalry on its market share and profitability. As a member of the management board, the viable solution is to scale back the number of offices already in place to cut costs to improve the net revenues generated by the Bank for every client. Before deciding on the branches that should be closed, it is important to understand the stakeholders in the decision process and their influences (Sung & Kim,2021). The stakeholders in the case study are the new service providers in the market, employees, bank customers and shareholders.
(i)The traditional Bank
The traditional bank is the main stakeholder in the decision-making process because of the decision’s impact on its operations. The bank’s management has to make the crucial decision on the banks that must be closed to reduce the overheads while considering the revenues they generate and its customer base.
(ii) The new entrants
The new entrants in the case study are important stakeholders in the case study. These entrants have acquired significant branches offering Internet banking services, implying that they have little overhead costs related to larger branch networks. Based on previous research, the traditional bank should face competition from these new entrants to remain relevant in the market and retain its market share(Bansal&king,2022).
(iii) Customers
The clients of the traditional bank are the third most important stakeholders in the case study and have the potential to influence the decision-making process (Lewis,2017). The management of the traditional bank has to consider the impacts of the closure of its branches on its clients. The bank’s clients in the urban centres may have a higher net worth compared to clients using the rural areas branches. The bank may be reluctant to lose customers with a higher net worth as they are the most profitable clients.
(iv) Bank Employees
Furthermore, it is important to consider the traditional bank’s workers as a shareholder. The bank’s staff operating in these branches will be impacted if the bank chooses to close any of its areas. For staff to find job opportunities within or outside the bank, the financial institution must offer training or support to its impacted employees.
(V)Investors
The bank’s investors are critical stakeholders in the decision-making process since the Bank only profits if there are investments. The bank’s loss of major branches would lead to the loss of a significant number of investors hence the loss of investment profits. The traditional bank needs to ensure its plan will boost net revenue per client while keeping them profitable.
(ii) Power and influence of the stakeholders
Each stakeholder in the case study has a different extent of control and influence over the decision-making procedure. Since the stakeholders determine the final decision, the bank holds the most leverage in this scenario. The bank’s management has the authority to maintain its clientele, develop its goods and services, and close some branches. The newcomers in the market are struggling to make an identity for themselves, hence have less influence and can only compete by providing services and goods to their clients (Srivastava & Agrawal,2020). The customers have a significantly strong influence over the decision since they can choose between the bank and the new entrant’s branches (Ozmen,2019). However, customers rely on banks for their financial needs, limiting their influence. The fact that the employees are not directly participating in the decision-making process limits their influence. They can only affect the choice by offering criticism and recommendations. Despite investing in the bank, the shareholders have minimal influence because they cannot directly influence its operations.
Finally, the analysis of the stakeholder’s attitude and power in the case scenario is shaped by their positions in the banking industry, as observed in previous cases (Busari etal,.2020). The traditional bank in this case study is facing strong competition from new entrants, and the decision to scale down operations to improve the generated income impacts various stakeholders. The impact on stakeholders, including customers, staff, and shareholders, should be carefully considered when deciding whether to close some branches. The bank must ensure that its choice will preserve its clientele and income while considering how it will affect its staff and investors. Additionally, the bank must consider the respective stakeholder’s degree of influence and power during decision-making.
Analysis of Resistance in the Case Study
(i) What is resistance to change, and what reasons for resistance?
Employees’ defiance and inability to modify their behaviour as required by an organization are known as aversion and resistance to change. Employee resistance to organizational change can take two forms: overt and covert(Sung & Kim,2021). This can be openly expressing opposition or unintentionally opposing a change in language or general employee behaviour. Employees’ perspectives, personalities, and needs influence their reluctance to change.
Person resistance is significantly affected by habit, economics, and job stability. A group’s general inclination to oppose change and defend its current position is known as resistance to change. Resistance from executives causes businesses to become rigid and unwilling to change in response to external or internal pressures. Power conflicts inside the organization, shoddy choices, and challenging authority structures are a few indications of how the opposition is displayed.
Organizational resistance toward transformation is a frequent occurrence that has several potential causes. There are various possible reasons for resistance to change in the reputable bank encountering competition from newcomers in the retail financial services sector. The fear of the unknown is one factor in people’s aversion to change(Alfes etal,.2019). The staff might be anxious about how branch closures would affect their job stability and the possible disturbance to their interpersonal connections and routines at work. Additionally, they could be unsure how the bank will respond to client complaints and concerns and whether the closings would drop the standard of service. The staff could prefer the current situation to the uncertainties and risks involved with transformation due to their fear of the undetermined changes, which can result in resistance to change.
The absence of confidence and interaction is another factor in people’s aversion to change. Workers and other interested parties could feel they need to be given details about the reasons behind the branch layoffs and how they will affect their communities and employment. Additionally, they might think their feelings and worries have been overlooked, making them feel disengaged and untrustworthy. Shareholders may believe that they are being deliberately excluded from the decision-making process and that their interests need to be sufficiently represented, which can result in opposition to change (Newman,2016). The absence of understanding and uniformity in the financial institution’s strategy and communications might also contribute to resistance toward the proposed changes. The bank staff and other concerned stakeholders may need clarification regarding what the traditional financial institution is attempting to accomplish and the clarity of its strategy (Chebbi etal,.2020). As a result of the stakeholder perception that the bank does not act in its best interest or has no way to accomplish its objectives, this lack of understanding and uniformity can cause disorientation, scepticism and reluctance to change. Resistance to the suggested adjustments may also be influenced by the need for more clarity and consistency in the financial institution’s strategy and communications. The goals of the conventional banking institution and the specifics of its strategy could be clearer to the bank personnel and other interested parties(Vaishnavietal,.2019). This lack of awareness and standardization can result in confusion, distrust, and resistance to change since stakeholders may believe the bank is not acting in its best interests or has no method of achieving its goals.
When establishing the suggested strategy of decreasing the spread of the branch network, a number of resistances might be encountered in this particular scenario.
Resistance (Employees): The traditional bank employees resisted the changes because cancelling major branches meant many employees lost their jobs. The basis of this resistance is the employee’s attempt to secure their job security.
Resistance (Customers): The traditional bank’s customers resisted the change as their convenience bank branches were being closed. Customers using the branches in rural areas may feel their need for a closer banking branch needs to be addressed.
Resistance (Regulators):
The institution faced resistance from the banking regulators, concerned with the impact
that the closure of branches had on the public.
(iii) Recommendations to overcome resistance
Recommendations:
- Employees
The first recommendation is that the management of the traditional bank makes early communication with the employees and ensures that they are aware of the changes and have enough time to adjust to the impacts of these adjustments (Oreg & Berson, 2019). The bank should consider offering training to support its employees. The training would include equipping the employees with new skills and assistance in their search for a new job. Finally, the bank can deal with the resistance by offering the employees an incentive during the transition period.
Handling the resistance from the customers involves the Banks’ decision to make early communications explaining the decision to close down the existing branches and the benefits of implementing the decision. The bank will communicate with its customers through E-mails and social media, among other formal marketing channels.
The bank can also offer its affected customers other financial options. The bank can provide its customers with mobile banking, among other available options(Peng et al.,.2021). Finally, the bank should consider offering its affected customers incentives, including reduced transaction fees and improved interest rates of over 10%.
- Shareholders
The bank’s shareholders would resist the proposed changes as they are concerned about their profitability when the bank closes many branches. The bank can handle the resistance from the stakeholders by engaging the regulators and explaining the rationale behind the strategy. The engagement may involve the bank’s management sharing its statistics on the profit margins of the affected branches(Cate et al.,.2017). The traditional bank may offer the investors an alternative banking and investment option. The alternative banking option will ensure that the investors meet their investment needs.
Communication Grid Table
The main aspect of the case study that requires a detailed communication plan is the proposed plan to scale down the branches of the Bank to reduce overheads. The plan to close the branches significantly impacts key company stakeholders, as many employees will be laid off. In contrast, many customers will have limited banking options as they need access to convenient banking partners. There is a need to develop a communication plan as it will ensure that all the stakeholders are informed of the strategy and its impacts.
(i) Communication Grid Table
| Stakeholder
Groups |
Interests | Communication objectives | Channels and Activities | Stakeholder Owner | Timing and Frequency |
| Shareholders (Investing in the Bank) | · The finance trends of the institution \ and profitability of their investments | · Communication on the proposed strategy, the rationale for the decision, and its advantages. | · Face-to-face meetings and other official digital communication channels. | The CEO, CFO, and Investor Relations manager. | · One month before the official implementation of the planned strategy. |
| Customers(with accounts in the affected branches) | · The issues with the security of their accounts
· The possibility of accessing banking services in future. |
· Communication on the proposed strategy. | · Official digital communication channels | · CMOs at branch management levels. | · Seven weeks before the official implementation of the planned strategy. |
| Bank Regulators | · The stability of the banking system and security of the stakeholders | · Communication on the proposed strategy, the rationale for the decision, and its advantages. | · Face-to-face meetings and other official digital communication channels. | · Compliance officers | · Eight weeks before the official implementation of the planned strategy. |
| Bank Employees (Working in closed Bank Branches) | · Job-security interests
· Motivation to successfully transition after the branch’s closure. |
· Face-to-face meetings and other official digital communication channels. | CHROs (Respective Banks ). | · A month before the implementation of the plan and throughout the transition.
|
|
| Public members within the affected communities | · The economic impacts (on small businesses) caused by the closure of the branches. | · Communication on the proposed strategy, the rationale for the decision, and its advantages. | · E-mail updates and other formal communication channels. | · Public affairs managers at respective affected branches.
· |
· Six weeks before the official implementation of the planned strategy. |
References
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