Innovation and Sustainable Business Development for Commonwealth Bank

Question: Discuss about theInnovation and Sustainable Business Development for Commonwealth Bank. Answer: Business Model of Commonwealth Bank Business model of an organization is the most significant framework that describes the resources of a company and its business environment are connected together to deliver a customer value and to produce the significant profits and revenues. In todays competitive environment, organizations create a sustainable business model that provides them an optimal mode of operations in their sector. The purpose of this essay is to provide the points of different authors regarding the business model and disruption. Additionally, the paper discusses the opportunities and threats which the Commonwealth Bank is confronting by the use of smart-connected products. Furthermore, it includes the business model canvas of the chosen organization and explains two of its aspects i.e. key resources and value proposition. Business Model is a conceptual framework that translates companys business strategy to implementation. This statement was given by Osterwalder Pigneur (2010). In this context, they further stated that the primary area of business model supports to understand and share the business idea of a firm. Secondly, it can enhance the observing, measuring and contrasting the business idea of firm. Thirdly, it assists in enhancing the implementation of business model in action (Osterwalder Pigneur, 2010). The authors stated that organizations can respond faster to the change in business environment with business model framework. It fulfills the gap between business process and its strategy. According to Eckhardt (2013) the concept of business model has huge value as a framework for strategists to generate and compare the theories about how a business provides value to its customers. It is seen as an abstract which allows a description of what the business is doing for its survival. The busine ss model includes three components such as value creation, value delivery and value capture (Eckhardt, 2013). The author describes the business model as an internal view and assists companys strategy by defining the value proposition and process system of firm to develop and deliver the value to customers. To enhance the efficiency of business model, various businesses are adopting disruptive innovation. Disruption and innovation are similar in that they are both builders and makers. Disruption is the technique that takes a left turn by changing and uprooting how people think, operate the business and learn. In his book, Paetz (2014) outlined that disruption develops new dimensions of the value which the old business model or product category is not able to address by fulfilling the unfulfilled needs of customers. According to the author, these new dimensions are some benefits like accessibility, simplicity, convenience, lower prices, ease of use etc. This nature of disruption brings more deepness and shows the endless nature of digital technologies (Paetz, 2014). The organizations will disruption attack the existing markets not just from the bottom, top and sides, but from all the three sides. Disruptive innovation and technology enables the organization to gain more competitive advan tage over its competitors. Thus, it can be stated that technological disruption includes different elements like technology, process, tool, behavior and business model which change the customers to develop new behavior and different needs with new values (Applegate, 2007). In todays business environment, disruptive innovation has enabled the organizations to use the smart-connected products in its business operations. Smart connected devices are the innovations in technology that helps the company to grab more opportunities for production development, capacity development and greater reliability from customers (Drucker, 2014). These products change the nature of competition and industry structure, showing the organizations to new competitive threats and opportunities. Smart-connected products are created with the processors, software, sensors that assist the organization to manage information exchange in its system. Commonwealth Bank of Australia is an international bank with its services across Asia, New Zealand, United States and United Kingdom. It offers several financial services such as business and institutional banking, retail services, fund management, insurance, superannuation, broking and investment services (Commonwealth Bank, 2018). The company has adopted various smart-connected products in its business operations. Currently, the team of Commonwealth Bank is focused on different smart-connected products like cyber, big data, smart machines, identity, Internet of Things, Ag-Tech, Block-chain, next generation compute and it also includes the atomic computing and commonwealth bank debit MasterCard. However the MasterCard assists the customers in online shopping and to access on mobile app but it has some security issues (Rajasingham, 2008). These technologies offer various opportunities to the company like it enables the bank to follow fast with disruptive play and develop new market opportunities to stay competitive among its competing brands. Smart machines assists the organization in controlling and operating the business activities from anywhere in the world (Chesbrough, 2010). The machines with sensors allow the bank to collect and manage the customer information among its all the branches. By the use of smart-connected products, the company is able to provide financial services smoothly. The people are able to open their account in bank online. In this way, Commonwealth Bank has the opportunities to increase its customer base in Australia and other countries. Apart from this, Commonwealth Bank is facing various threats due to smart-connected devices like older people in bank are not able to understand innovative and updated technology implementation. This causes higher cost of training to the organization (de Jong , van Dijk, 2015). There are so many customers of Commonwealth Bank who are not able to access its updated services like ATMs, debit cards etc. The customers may feel uneasy and unfamiliar with the services. There may be some issues related to security of confidential information of customers of bank. The data of clients can be stolen by the hackers by unauthorized access to smart-connected devices. It is the biggest threat for this financial service provider as it has confidential information about the customers. The business model framework of Commonwealth Bank is created below: Key Partners Subsidiaries Investors Agreements with 2 Chinese banks (Hangzhou City Commercial Bank and Jinan City Commercial Bank) Credit card firms Financial community ATM service desk Regulatory Agencies Key Activities Financial services Credit card facilities and loans Investment services Customer acquisition Transaction and saving account Risk assessment Value Proposition Retail banking and financial services Risk taking Sustainable development Financial services to small business and personal customers It is one of the four biggest banks in Australia. Premium services Wealth management. Customer Relationships Security Automation Convenience Direct contact with regular customers Non-personal channels Trust and reputation. Customer Segments Corporate and massive retail customers Credit card holders Account holders Merchants Governments All the group of customers (Male and Female) Key Resources 100 plus branches of bank Largest bank ATM networks Information technology capabilities Bank staff Customer base Brand presence all over the world. Physical resources at bank branch Channels Online Banking Mobile Banking Official website of Bank Social networks Newsroom Cost Structure Administrative expenses at international branches Financial costs IT infrastructure development and maintenance Security costs Rewards and interest paid Compensation Salaries and wages Revenue Streams Premium on policies Return on investment portfolio Service fees Financial revenues From the above business model canvas, two major aspects are selected for the discussion i.e. value proposition and key resources. Value proposition of an organization is the most important component of its business model that assists the organization to deal with different threats and gain more competitive advantage against its competitors. It assists the customers to make their perception towards companys products and services. The value proposition of Commonwealth Bank includes that it is offering different financial and banking services to Australian customers (Meltzer, 2017). Moreover, the company has positioned itself as one of the four biggest banks in Australia. By attracting more personal and small business customers, Commonwealth Banks is able to maintain a sustainable growth in banking sector. The firm is offering premium services and wealth management services to the customers in Australia and other nearby nations. This value proposition has assisted the organization in in creasing its customer base. In this way, Commonwealth Bank is able to gain sustainable competitive edge in banking industry (Zott, Amit Massa, 2011). Furthermore, resources and capabilities is also an important component of business model canvas of Commonwealth Bank. This organization owns various resources that help the company in providing satisfactory services to its targeted audiences. Human resources are the major asset of this bank that serves the demands and expectations of customers. Till now, the company has opened its 100 plus branches and various ATMs. It is the largest bank in Australia and has information technology capabilities for providing effective retail banking and financial services to customers (Jones-Evans, Klofsten, 2016). The organization is able to create a huge brand presence all over the world. In this way, both of the components play an important role in life of Commonwealth Bank. Thus, it can be concluded that business model plays an important role in the growth and success of an organization. It supports the company to become successful in competitive environment. By the use of this, Commonwealth Bank can enhance its services delivery process in the future. Identification of key resources and capabilities will assist the bank to meet the expectations of targeted customers. In the future, the company can enhance its business model by adopting disruptive innovation and technology. It can practice the opportunities to overcome the threats posed by smart-connected products. References Applegate, L. M. (2007). Jumpstarting Innovation: Using Disruption to Your Advantage.Boston: HBS working. Chesbrough, H. (2010). Business model innovation: opportunities and barriers.Long range planning,43(2-3), 354-363. Commonwealth Bank. (2018). CommBank: Personal banking including accounts, credit cards. Retrieved from https://www.commbank.com.au/. de Jong, M., van Dijk, M. 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The business model: recent developments and future research.Journal of management,37(4), 1019-1042.