The Great Recession, as the global financial meltdown has come to be called, has
had devastating effects on the global economic landscape - particularly on the
banking industry. While the big, multinational investment banks that were at the
heart of this crisis were hit most severely, with players such as Lehman Brothers
Inc. among others disappearing from the financial landscape, retail banks –
institutions primarily engaged in the standard banking business with private
customers – also suffered considerably from the global collapse of financial
markets.1 Unlike their multinational counterparts, however, retail banks cannot rely
on profitable mergers and acquisition activities or proprietary trading to boost
income once the economy picks up again. While the challenges created by the
Great Recession for retail banks are complex, they are not the only threat to longrun
profitability. In many markets – especially in the mature western European
ones, other dark clouds appear on the horizon. To name only a few, plummeting
sales, narrowing profit margins, consumers’ lack of confidence in the banking
system and operational cost problems threaten retail banks in mature markets
such as Germany.2 Postbank, a major German retail bank with a strong domestic
customer base is one of the players that have to make strategic adjustments to
cope with a changing economic landscape. But what will these strategic
adjustments be – and in which priority do they need to be undertaken? Although
literature on the financial crisis and expected changes in banking industry is
paramount, so far little attention has been given to showing how strategy in the
retail banking segment in the distinct geographic location of Germany will have to
look like for a specific player in the post financial crisis era.
Table of Contents
1. Introduction
1.1 Introduction
1.2 Aim of this paper
1.3 Research Approach
2. The Conceptual Framework of Business Strategy
2.1 What is Strategy?
2.1.1 On the Emergence and History of Strategic Management
2.1.2 A Conceptualization of Business Strategy and its Goals
2.2 Strategy as a Quest for Value
2.2.1 How Companies Create Value
2.2.2 Value Distribution in Favour of Share- or Stakeholders?
2.2.2.1 The Shareholder Approach
2.2.2.2 The Stakeholder Approach
2.2.3 Value Distribution at the Postbank
2.2.3.1 Company Overview & Business Divisions
2.2.3.2 How Postbank Distributes Value
2.3 Different Types of Business Strategies: An Overview
2.3.1 Business Strategy as a Strive for Competitive Advantages
2.3.1.1 Competitive Advantage as a Cornerstone in Explaining Corporate Success
2.3.1.2 Determining the Sustainability of a Competitive Advantage
2.3.2 Generic Strategies and the Market-Based View of the Firm
2.3.2.1 Theoretical Foundations of the Market-Based View
2.3.2.2 Generic Strategies: Cost Leadership, Differentiation and Focus
2.3.2.3 Critical Evaluations of the Market-Based View
2.3.3 The Resourced-Based View of the Firm
2.3.3.1 The Emergence of the Resource-Based View as a Critique of Market Based Perspectives
2.3.3.2 Towards a Resource-Based Business Strategy
2.3.3.3 Critical Evaluations of the Resource-Based View
2.3.4 Current Trends in Business Strategy Research
2.3.4.1 The Evolution of the Strategic Management Field – an Outlook
2.3.4.2 Resource-Based and Market-Based Views in the 21st Century
2.3.4.3 Unifying Resource-Based Thinking with Porter’s Work
2.3.5 A Strategy Assessment of the Postbank AG
2.3.5.1 Assessment of the Current Strategy
2.3.5.2 A Comparison of Postbank’s Strategy with the Theoretical Framework
2.4 Elements for a Successful Strategy Implementation
3. Economic Analysis for the Time Period Before and During the Financial Crisis
3.1 GDP, Economic Growth and Business Cycles
3.1.1 Measuring Economic Activity
3.1.1.1 Explaining GDP and what it Measures
3.1.1.2 Real versus Nominal GDP
3.1.2 Economic Growth
3.1.2.1 Describing and Measuring Economic Growth
3.1.2.2 The Main Sources of Economic Growth
3.1.3 Business Cycles – Fluctuations around the Economy’s Long-Run Growth Rate
3.1.3.1 A General Idea of the Business Cycle and its Terminology
3.1.3.2 Characteristics of Business Cycles
3.2 Contrasting Economic Periods: The Early 2000s vs. the Era of the Great Recession
3.2.1 The Boom Period of the Early 2000s
3.2.2 The Great Recession of 2007 – Why Things Got so Bad, so Fast
3.2.2.1 The Significance of Low Interest Rates in the Post-Dotcom Era
3.2.2.2 Securitization and the US Housing Bubble
3.2.2.3 How the Great Recession Affected Growth in Advanced Western Countries
3.2.2.4 Economic Outlook: Sovereign Debt Challenges Lie Ahead
4. German Retail Banking in Transition – Plotting Strategy in the Aftermath of the Great Recession
4.1 The Structure of the German Banking Market
4.2 A Snapshot of the German Retail Banking Market
4.2.1 Defining Retail Banking
4.2.2 Market Analysis
4.2.2.1 Market Analysis in the Retail Lending Segment
4.2.2.2 Market Analysis in the Retail Savings & Investments Segment
4.2.3 The Industry Structure of the German Retail Banking Segment
4.2.3.1 The Competitive Landscape for the Retail Lending Segment
4.2.3.2 The Competitive Landscape for the Retail Saving & Investments Segment
4.3 Postbank’s Position in the Retail Banking Industry
4.4 German Retail Banking Strategy and the Great Recession
4.4.1 The Impact of the Great Recession on German Retail Banks
4.4.1.1 The Crisis’s Impact on the Whole Industry
4.4.1.2 The Crisis’s Impact on Postbank
4.4.2 Can Business Strategy Be Held Accountable for this Hit?
4.5 Routes to Sustained Profitability in the Post Financial Crisis Era
4.5.1 A Review of Postbank’s Current Strategy & Critical Resources
4.5.2 A Categorization of Potential Threats to Postbank’s Competitive Position
4.5.3 Challenges for Retail Banks in the Aftermath of the Great Recession
4.5.4 Strategic Recommendations for the Postbank – A Prioritized Action Plan
5. Conclusion
Objectives and Topics
This thesis examines the strategic adjustments required for Postbank AG to regain long-term profitability following the global financial crisis. By analyzing industry structure and firm-specific resources, the paper develops a prioritized action plan to navigate the challenging landscape of the German retail banking market.
- Theoretical evaluation of business strategy (Market-Based vs. Resource-Based Views)
- Macroeconomic analysis of the Great Recession and its impact on the banking industry
- Assessment of the German retail banking market and industry structure
- Categorization of strategic threats to Postbank’s competitive position
- Development of a prioritized strategic action plan for Postbank AG
Excerpt from the Book
2.1.1 On the Emergence and History of Strategic Management
Although the area of strategic management did not become an academic discipline until 1960, its roots can be traced back to the beginning of the 20th century when students of Harvard Business School started discussing corporate development with top executives in courses called “business policy”.
Once strategic management was accredited an own area of research in the field of business administration in the 1960s, it received impressive academic attention which can be illustrated by both the emergence of a big scientific community and the establishment of several strategy-focused top-tier journals. Observing the underlying dynamics reveals that there are several reasons that have facilitated the rapid development of this discipline.
An important contribution has been made by the North American business schools that – in an attempt to orchestrate functional business dimensions – have tried to build a holistic, integrating approach towards business education. Other areas that impacted the emergence of strategy as a management discipline can be found in business practice where rapid changes in the competitive environment had created a need to explain how to prepare a business for the upcoming future or how to sustain corporate success.
Besides emphasis on strategic planning was also driven by accountants, engineers and operations research specialists in the belief that firms would be able to control their futures if they allocated their resources according to detailed planning.
Summary of Chapters
1. Introduction: Outlines the impact of the financial crisis on retail banking and sets the aim of developing a prioritized strategic action plan for Postbank AG.
2. The Conceptual Framework of Business Strategy: Discusses theoretical foundations, including the Market-Based View and the Resource-Based View, and assesses Postbank’s strategic position.
3. Economic Analysis for the Time Period Before and During the Financial Crisis: Analyzes economic fundamentals and the root causes of the financial crisis to provide a basis for industry analysis.
4. German Retail Banking in Transition – Plotting Strategy in the Aftermath of the Great Recession: Analyzes the German retail banking sector, evaluates Postbank’s performance during the crisis, and derives a prioritized action plan.
5. Conclusion: Summarizes the key findings and the strategic framework developed for Postbank to achieve sustained profitability in the post-crisis era.
Keywords
Strategic Management, Postbank AG, German Retail Banking, Financial Crisis, Great Recession, Competitive Advantage, Market-Based View, Resource-Based View, Value Creation, Portfolio Complexity, Strategic Action Plan, Operational Efficiency, Banking Industry Structure.
Frequently Asked Questions
What is the core focus of this bachelor thesis?
The thesis focuses on defining a prioritized strategic action plan for Postbank AG to help the company restore long-term profitability in the aftermath of the global financial crisis.
Which theoretical frameworks are used to analyze the bank's strategy?
The author utilizes the Market-Based View (Porter's approach) and the Resource-Based View of the firm to analyze Postbank's strategic position and challenges.
What is the primary research objective?
The objective is to identify specific competitive advantages and weaknesses of Postbank in the context of ongoing industry changes and to create a time-bound, prioritized action plan.
How is the analysis methodology structured?
The methodology combines an analysis of economic parameters, a structural review of the German banking market, and a categorization of strategic threats matched against firm-specific resources.
What are the central themes discussed in the main body?
The main body covers the history of strategic management, the comparison of shareholder vs. stakeholder approaches, macroeconomic factors during the crisis, and a deep-dive analysis of Postbank's operational performance.
Which specific banking segments does the paper evaluate?
The paper primarily examines the retail lending segment and the retail savings & investments segment within the German retail banking industry.
How did the financial crisis specifically impact Postbank?
The paper highlights that Postbank suffered significant losses in 2008 and 2009 due to exposure to structured credit portfolios and capital market-related activities that did not align with its core retail banking business.
What does the author suggest for future cost management at Postbank?
The author recommends moving beyond simple "slashing" of administrative expenses by focusing on branch productivity, reducing the share of civil servants in the workforce, and optimizing operational models.
- Quote paper
- Tobias Pommerening (Author), 2010, Strategic Changes for Business Models in the German Retail Banking Industry in the Post Financial Crisis Era, Munich, GRIN Verlag, https://www.grin.com/document/159081
