• Author / Uploaded
• Ian McKay

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• Crisis financiera de 2007-2008
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• Bancos
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METHODOLOGY

The case studies will be compiled from information gathered on both companies through senior managers and junior staff. The idea is to have perspectives from those persons integral to the decision-making process as well as those directly affected by these decisions. The data will be analysed and a PESTEL analysis done to determine the major environmental factors, the impact on the organisation and the effectiveness of the responses to the respective changes. A summary comparing both organisations determining similarities and differences will be outlined and we will identify the type of approach both companies have adopted.

Historical Background Scotia Group Ltd. Bank of Nova Scotia Jamaica Ltd. began in 1889, 120 years ago with their head office in Canada and one Kingston office. Today it boasts 42 branches island wide and the largest ATM network in the island. It has grown consistently since 1889, changing with the times and adapting to the prevailing cultures of the land. Scotiabank Jamaica operates in a competitive environment and has been championed as the Bank of the Year for 3 consecutive years. Core business lines comprise Corporate and Commercial Banking, Retail Banking, Small Business Banking, Wealth Management, Insurance and Mortgages. All these services are provided to the Jamaican populace through the Branch networks and respective subsidiary offices islandwide which are equipped with professional, courteous and expert staff. In October 2006, Scotiabank Jamaica announced its intentions to acquire DBG. The merger was successful and in 2008, the name was changed to Scotia DBG. This move strengthened the wealth management arm of the Bank and broadened the customer base significantly. It also played a pivotal role in the renaming of the Group to Scotia Group Jamaica Ltd. which according to then CEO Bill Clarke sped up the acquisition process. In 1998 the Scotiabank foundation was formed out of a desire to give back to the Jamaican public. The startup endowment of J$100 million now stands at J$284 million. The core principles of the foundation include assisting economically and socially disadvantaged Jamaicans in the alleviation of poverty, deprivation and distress. The foundation is also committed to understanding and addressing the root causes of

these ills. Areas of Health, Education and Community Outreach have benefitted greatly from the SJF to a tune of $J362 million with some projects receiving annual donations in the millions. In 2004, total number of employees was about 2100, 250 of which were contractors while the remaining 1850 were complement staff. The current staff complement now stands at 2251 which includes Scotia DBG staff. For the last five years, 70% of the staff is female and 30% male. According to former CEO Bill Clarke, “Our record results remain grounded in our core strengths, and focused on sound fundamentals – solid execution of our plans, careful management of risks and expenses, and a total commitment to customer satisfaction.”

The Bank of Nova Scotia Jamaica Limited Bruce Bowen President & Chief Executive Officer The Scotia Jamaica Building Society Gladstone Whitelocke Vice President & General Manager Scotia Jamaica Life Insurance Company Limited Mrs. Jacqueline Sharp (ACTING) Vice President & General Manager Scotia DBG Investments Limited Miss Anya Schnoor President & Chief Executive Officer

HISTORICAL BACKGROUND J. WRAY & NEPHEW LTD. Wray & Nephew is the oldest company in Jamaica, a hallmark of excellence since 1825 and its name synonymous with the blending and marketing of the finest rums to over sixty countries around the world. The headquarters of the company is in Kingston, Jamaica and occupies 28.8 hectares on both sides of the Spanish Town Road, the main industrial artery of the island’s capital. The complex houses the company’s corporate centre, state of the art laboratories, warehouses and blending & bottling facilities in one of the most extensive and modern industrial parks in the Caribbean. The company’s over 3000 employees represent an impressive range of skills in the art of making and marketing rums, wines and spirits as can be found anywhere in the world. The company is as proud of the high calibre of its people as it is of the quality of its products. Wray & Nephew is a major agro-industrial enterprise, operating three large estates, namely Appleton, Holland and New Yarmouth estates. Appleton- one of the most beautiful estates in Jamaica, provides the basis for the company’s great rums. It is also the focus of the company’s involvement in tourism, the centrepiece of a

tour that gives visitors to the island a chance to visit the distillery sampling the wonderful rums made by Wray & Nephew. In addition to rum, Wray & Nephew produces, under licence, a wide range of wines and other spirits, including a number of well-known international brands. Among these are Smirnoff Vodka, Bols Liqueurs, Gilbey’s Gin and Stone’s Ginger Wine. In 1992 the company established a subsidiary in the United Kingdom, J. Wray & Nephew (U.K.) Limited, with head offices in London, bringing its services closer to its growing market in Britain and Europe.

PESTEL ANALYSIS FOR SCOTIA GROUP JAMAICA LTD. POLITICAL In 2007, the passing of political baton from PNP to JLP saw a change in policies that affected Scotiabank both positively and negatively. An increase in commercial banks’ reserve requirements by Bank Of Jamaica (BOJ) in December 2008 reduced the total amount that the lending institutions could distribute as loan funds. This change impacted the Bank’s bottom line in terms of earnings which resulted in the institution adopting more cost control measures to replace the fall in revenue. As a result, staff was encouraged to support the costcutting measures implemented in order to improve efficiencies. Buy-in was had from all units and subsidiaries and incentives given to those branches that saw a reduction in expenses. On a wide scale however plans are made to be robust across changing political administrations, and as an institution that has ninety per cent of government’s accounts there has been no material impact. ECONOMIC The most significant economic impact over the last five years is the current global recession. One positive effect on the organisation is that there has been an inflow of clients from competitors as well as

from those institutions perceived to be financially weak. On the other hand, the resultant increase in unemployment has meant an inability on the part of affected customers to make loan payments and invest funds, thereby resulting in a high debt portfolio. Customers have shifted their disposable income to higher “priority ones”. In order to stem the growth of the debt portfolio, the Bank proactively employed the Customer Assistance Program (CAP) which sought to alleviate loan payments for qualified customers over a twelve month period. CAP was rolled out to retail and commercial customers and was aimed at reducing monthly payments and easing the debt burden for clients. Another strategy employed involved reduction in base lending rates to stimulate growth in the productive sector. This move engendered loyalty and trust from staff and customers alike and further cemented Scotiabank’s position as the leading institution of choice.

The global economic recession exposes the organisation and forces senior management to make prudent decisions that facilitates efficient and effective organisational structures. It is a given that the economy will grow at any robust pace once the global recession abates, but the company continuously changes its organizational structure to make it more closely aligned with the expected growth areas. Management of the organisation has benefitted somewhat from the global recession in that it enhanced management practices since there is a vigilant attempt to remain competitive and stay ahead of the game by employing best practices to reduce costs and improve service and profitability levels. Learning acquired from failed institutions and markets are valuable in helping them steer clear of certain strategies. The labour market is vibrant as many companies have been laying off workers making available a rich and diverse talent pool. Excellent

Jamaican talent that had gone abroad to study and work are returning home to seek local opportunities due to the fall out in the international market. While this is a good thing for those seeking talent, the employment level within Scotiabank has remained stable and there has even been a cap on hiring in response to the global recession.

SOCIAL Greater consumerism has resulted in a larger appetite for consumer loans over the last five years. The nation’s streets are flooded with cars as persons standard of living has risen to some measure making certain things more available to the common man. Credit cards are hotly pursued as customers seek to cash in on extended credit not minding the high interest rates to be applied when these cards are not properly managed. The demand for greater explanation on fees / charges has also arisen, causing the bank to go back to the drawing board to ensure that the rationale for every fee adjustment can be easily explained by staff. Therefore, some fee adjustments have had to be delayed, negatively impacting our Non-Interest Revenue growth. A remarkably well educated and more sophisticated workforce is available at Scotiabank. A high percentage of the employees have a University level education. A plethora of educational institutions have come on the scene to prepare individuals for better job opportunities. Staff is encouraged to develop themselves and further their education and Scotiabank through its Training and Development Centre provides

training and other various means of support to enable them to achieve their goals. Greater awareness of work-life balances in developed countries has resulted in fewer people willing to go beyond the call of duty (e.g. overtime, weekend work, etc.). The cable revolution has created a more materialistic culture where young adults expect to gain the various trappings within a few years on entering the workforce. Therefore, there are increased incidences of frauds, geared at accelerating this time-line. The company has made many adjustments in its internal audit and operation management division in an attempt to decrease or eradicate fraudulent activities. Dress codes have been adjusted and new standards of dress introduced for all classes of staff as a result of shifts in societal norms. The bank has a reputation for professionalism and in the recent past has had to realign its position on staff deportment in order to protect and preserve its image. This approach has worked in favor of the bank as generally staff complies. TECHNOLOGICAL Technology has been an ally, as this has served as the launching pad for many of Scotibank’s alternate service delivery channels for its products. Internet has also been an ally and as such many manuals and other learning aids have been implemented and are available to staff anytime. There are plans to better exploit the e-commerce market and the bank’s data-mining capabilities have increased significantly, based on its ability to better utilize information in its database.

The International Banking Platform was introduced in 2005 which has seen much advancement and has benefitted the Bank in terms of improving sales and service delivery. Plans are currently afoot to make signature cards available online for easy reference across the Branch network. This should improve service delivery and reduce wait time for customers in branches as the demand for higher turn-around time at service delivery points from the younger generation have been the most impactful. Scotiabank has been improving its alternative delivery channels such as ATMs, internet banking and telephone banking while staying ahead of technological advances. Scotiabank is now able to better differentiate the type of service to different customer segments. Its approach to communication has changed as the bank is now up-front-and-centre in: (1) quickly informing the public of product innovations, and (2) offering economic and investment advice.

ENVIRONMENTAL An increase in the proportion of the staff having completed higher levels of studies has enabled Scotiabank to better engage customers on a variety of current issues. However, there is also a greater level of restlessness among staff for promotions. The Viewpoint survey is one tool that is used to assess the performance of managers and supervisors and is completed by incumbents and junior staff. This report gives a clear indication of how staff members feel about their jobs and work environment.

LEGAL The introduction of the Proceeds of Crime Act has significantly changed the landscape of how transactions are processed and on how funds are received by the Bank. It is now incumbent on the staff to ensure due diligence is exercised when gathering sensitive details such as source of funds and verifying customer identity. This has caused a certain amount of apprehension among the staff and the natural tendency to pass the buck is even more pronounced as persons respond by shirking this responsibility and referring unusual transactions to Compliance officers and supervisors.

PESTEL ANALYSIS FOR J. WRAY & NEPHEW J. Wray & Nephew Limited, like many other organisations, has been subjected to many external environmental factors. These factors are large in number, but our analysis will only allow us to examine a few of the most significant ones. The information was gathered using the PESTEL technique. Questionnaires were created and circulated to (1)

the Managing Director of the Global Marketing Division (2) the Manager of the Corporate Affairs Division and (3) the Manager of the Human Resource Development department. The questionnaires were designed to identify the most significant environmental functions influencing the company, and how the company reacted to these changes to remain competitive and take advantage of the opportunities. POLITICAL The global financial meltdown has been cited as the most significant change to affect the company in the last five years. This crisis has affected J. Wray & Nephew in many ways. Distributors for their products overseas have had to adjust the way they conduct their businesses: lowering inventory levels as cash becomes scarce. This has impacted the sales of the company adversely. In order to maintain sales targets the company has had to work with their distributors to ensure that their orders, when placed, go out in a timely fashion and most efficiently. The crisis has also affected supplies coming into the island. The company has run out of inputs sometimes e.g. glass, caps, labels etc., causing production to shut down and more critically, causing stock out for certain local products. To eradicate this problem, saw Wray& Nephew increasing the number of suppliers for certain inputs. The change in government has also impacted the company. The company decided to acquire land from the government in order to cultivate more cane for the production of rum. The negotiation started with the previous government but the current government has not taken a decision on that matter.

Our research on this issue led us to deduce that the recent acquisition of the Lascelles DeMerdcado Group by Trinidadian interests may be the reason behind the delay. ECONOMIC Operations in the current recession have been challenging. J. Wray & Nephew Ltd. has taken the position to avoid debt. The organisation focuses more on optimizing cash and monitoring closer the cash cycle in order to restrict the need to borrow. The company has also become more aggressive in capitalizing on opportunities. The recession has required that organisational structures be scrutinized for inefficiencies. Restructuring has become necessary and a number of jobs have been outsourced. Roles have also been consolidated. J. Wray & Nephew has been affected both positively and negatively by taxation. The company benefit from the roll back of the 2% customs user fees. On the other hand, the government increased the special consumption tax on under proof rums by 1%. The net effect is positive as the roll back in user fees has positively impacted the bottom line and the company took the decision not to increase product prices based on the increase in the Special Consumption Tax. SOCIAL Consumers both locally and internationally have become more interested in premium rums highlighting the quality of rum and its ability to compete for market share with other premium categories such as whisky and cognac. Employees buoyed by their own involvement in new product development and launch (Jagra), continue to give tremendous support to the successful marketing and distribution of the brand.

J. Wray & Nephew Ltd has always advocated for continuing education for its staff. Their new performance appraisal scheme is heavily weighted on development of their staff. TECHNOLOGICAL Technology has allowed J. Wray & Nephew Ltd. to become more efficient at forecasting, conversion, warehousing and order processing. Internet technology has been used to market their products globally as well as connecting global partners with online forecasting. Protection for intellectual property, particularly in the case of brand Jamaica, has been below expectations. There are cases of products being sold bearing the name Jamaica, but made outside Jamaica. Label standards are not being enforced. Where possible, the legal team at J. Wray & Nephew Ltd. has been vigilant in terms of protecting its own intellectual property (brands of J. Wray & Nephew Ltd.). ENVIRONMENTAL The managing director states that “over the past five years the management style has become very empowering”. A more open approach has been employed. The recently concluded job evaluation exercise highlighted fairness and openness to the employees. There has also been more interaction between senior management and all employees at the social level. Over the past 2 years, the company introduced a new mission statement, motto and core values “SPIRIT”. This has changed the culture of the organisation as emphasis and reinforcement is placed on

living these ‘values’. A number of new initiatives have been implemented including departmental recognition awards. Based on information on the ground, staff morale has fallen due to recent challenges with the Industrial Disputes Tribunal regarding the retrenchment of 40 employees. The general uncertainty in the economy has also contributed to the perceived fall off. The employment of the Employment Engagement Manager is expected to create new programmes to rebuild staff morale. LEGAL Labour Relations and Industrial Disputes Act – Provision for 21 days notice to the Ministry for redundancy.

SUMMARY For any organization to succeed and meet its goals it must not only consider its internal environment but must also be aware of the external factors which have a direct impact on its operations. A comprehensive review of both companies reveals one striking similarity: that of their customer-centric nature. However it is unfair to compare both without first identifying the type of production or transformation activities that determine the end product. JWN is vertically integrated so nothing is wasted in its production cycle. They have now become more attuned to customers: an end which was triggered by maturing of production technologies. At Wray and

Nephew, a manufacturing company where the end product is a tangible good, the organizational structure is top-down and focuses on tasks whereas in the banking industry, the organisational structure is less hierarchical and service is the end product. We recognise that the relevance of the organisation depends on consumer demand. In that regard, the processes through technology have been aligned to make the production and distribution cycle (route to market) reactive to the customers’ needs. Relationship-focused strategies are employed thereby the organisation has evolved from classical approach to opensystems approach. Scotiabank on the other hand provides intangible goods and services where the transformation process is focused on being customer centric. Scotiabank and JWN are very proactive in identifying the needs of their customers, exercise prudent corporate responsibility, are intone with staff and the internal organisation and generally respond similar to the major changes affecting the respective organisations. Both companies have displayed the characteristics of an open systems approach to how the respective organisations are governed.

Appendix 1. Sample of questionnaire used to gather information We are research students reading for our Masters Degree at the University of the West Indies. We are currently studying Organisational Behavior for which two case studies are being prepared. We seek your assistance in completing this survey which seeks to determine how dependent an organisation and its subsystems are on its internal and external environment. The questionnaire is divided into the 6 major external factors which affect every organisation (PESTEL analysis).

Political 1. What is your role at Bank of Nova Scotia Ltd.? _______________________________________________________________________ _______________________________________________________________________ ______________ 2. What major environmental changes, internal or external, have impacted Bank of Nova Scotia Ltd. over the past five years?

_______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ ____________________________ 3. How has the change in government and the resultant changes in policies impacted Bank of Nova Scotia Ltd.? _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ ____________________________

Economic 1. How has the current economic recession affected: (i) The organisation _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ ____________________________ (ii) Management of the organisation _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ ____________________________ (iii)Management/organisational structures _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ ____________________________ (iv)

Employment Levels

_________________________________________________________________ _________________________________________________________________

_________________________________________________________________ _____________________

2. How Has Bank of Nova Scotia Ltd. been affected by: (i) Taxation _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ ____________________________ (ii) Market route and distribution _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ ____________________________ (iii)

Inflation

_________________________________________________________________ _______ _________________________________________________________________ _______ _________________________________________________________________ _______ (iv) Interest rates and exchange rates _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ ____________________________

(v)

Change in Consumer Spending

_________________________________________________________________ _________________________________________________________________

_________________________________________________________________ _____________________

Social

1. Over the past 5 years, what social changes have had the most impact on your organisation?

_________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ ____________________________ How have the following societal changes affected your organisation? (i) Consumer attitude and opinion _________________________________________________________________ _________________________________________________________________ ______________

(ii) Education at the workplace _________________________________________________________________ _________________________________________________________________ ______________

(iii)Attitude to work _________________________________________________________________ _________________________________________________________________ ______________

(iv)

Shift in values and culture

_________________________________________________________________ _________________________________________________________________ ______________

Technological

1. How has technology improved/impeded growth at Bank of Nova Scotia Ltd. over the past 5 years in respect of: (i) Information technology _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ ____________________________ (ii) Internet (e-commerce, e-learning) _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ ____________________________

(iii)Intellectual property issues _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ ____________________________ (iv) Information & communications _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ ____________________________

Legal 1. Have there been any legal changes in the past 5 years relating to:

(i) Employment laws _________________________________________________________________ _________________________________________________________________ _________________________________________________________________

_________________________________________________________________ ____________________________ (ii) Industry specific regulations _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ ____________________________

Environmental

1. What is Scotiabank doing differently over the past 5yrs in terms of: (i) Management style _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ ____________________________ (ii) Organisational culture _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ ____________________________ (iii)Staff morale _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ ____________________________ (iv)

Management Structure

_________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _____________________ (v) Organisational Structure

_________________________________________________________________ _________________________________________________________________ _________________________________________________________________ _____________________

References