The M&T Bank

Introduction

Established way back in 1856 as manufacturers and traders bank, the M&T Corporation, continues to excel in the banking industry. It is ranked among the twenty best performing banks in the United States. Its headquarters are in Buffalo, and it has over six hundred branches across America. In the FY ending June 2011, the bank’s current assets holding were a high of seventy nine billion. It has over two thousand ATMs at different locations of its geographical location to facilitate effective service delivery to its esteemed customers. With over one hundred and fifty years in the banking sector, to still be in the limelight, in the sector, the bank has used a couple of strategies.

One strategy the bank has used over the years is differentiation, despite the competition it faces from the high number of enterprises in this sector, the bank has been able to tailor its products to meet and go beyond the expectations of its customer through its differentiated financial services, its services are also diversified to include financial consultancy to its customers, these strategies among others have enabled the bank to retain its customers and attract new ones at the same time. Its CSR is plausible through its charitable foundation; also, its employees involve in various community activities. The M&T Corporation is arguably one of the best regional banks in America.

The banks general environment

Another term for general environment is macro environment. This environment is of high significance to an organization, because it is the environment it operates in. What happens in the general environment impacts on an enterprise’s performance, because of this an organization should always keep track of its external environment, to identify changes and make the necessary adjustments, lack to do this it may be seen off the industry by competition. The key segments of the general environment that would highly influence the bank’s performance include technology and demographic factors.

Technological factors

Technology is a very dynamic trend in the general environment. New technologies are invented by the day. Technology improves efficiency in an organization and cuts down the cost of operation to improve the overall returns. Dynamism in technology necessitates an organization to keep in pace with technological trends, lack of this may see an enterprise’s technology go obsolete and, therefore, endangering its performance in the industry. Technology is of high relevance in the banking sector, for example, in the advent of the Automatic Teller Machines, every organization had to move swiftly to embrace the technology to maintain its competitive advantage. The M&T bank responded to this milestone in technology by establishing over two thousand ATM machines across its areas of operation.

Technology impacts the banking industry as whole, because it increases efficiency and accuracy. For example, an ATM machine performs accurately all the functions of tellers eliminating the human errors that may occur. It is also fast. When banks embrace technology, their cost of operation goes down, the banks, for example, would not employ the number of tellers it would have in absence of the machines, therefore, the cost of salaries the bank will have to incur are cut down. If there is a new technology, all firms in the industry must embrace it, a firm, which fails to do so, is placed at adverse, and its presence in the industry may be threatened. The M&T Corporation has maintained a steady competitiveness in technology by investing vastly in R&D. The organization sets aside considerable portion of its reserve towards research and innovation, this way it has always been on the frontline in technology.

Demographic factors

Demographic factors are highly essential to an organization. The population most importantly determines the market share of an enterprise. A bank can not do without its customers, and; therefore, there is a need for continuous market research to establish the preferences of the customers and consequently shape the products/services in line with consumer preferences. The demographic environment has an outstanding impact to the banking sector; it is what determines the profitability of the firms. The M&T bank has realized the relevance of the demographic factors; it has established various community initiatives to impress the communities in which it operates. Its employees participate continuously in community activities, to create a good reputation for the corporation.

The CSR measures undertaken by the bank enhance the good corporate citizenship for the organization and the locals enjoy being identified with it. Through its charitable arm, the bank supports various community initiatives, for example, in 2011 eleven it spent over seventeen million in funding various community activities. The demographic factor is also important to the banking sector because provides the employees; it is, therefore, important for individual banks to monitor trends in demography to make it easy for hunting talent. A bank that knows the demographic trends of its environs stands at a better competitive edge.

Forces of competition that highly impact on its performance

The banking sector has a lot of competition due to the many banking institutions in America today. Competition is a paramount aspect that determines the productivity of an enterprise’s productivity in the banking sector, and; therefore, it is necessary to enforce effective strategies to address competition. The main forces of competition that impact the M&T bank include the risk of new entrants and the inherent competitive rivalry, in the in the banking industry.

Competitive rivalry

Competitive rivalry in the banking sector is highly outspoken. It is enhanced by the high number of banks in the United States; another thing of competitive rivalry in the banking sector is that the banking service is the same; the services offered by one banking institution may as well be easily offered by another bank. Because of the competitive rivalry it faces, the M&T bank has enforced strategies that enable it to stay ahead in competition. One notable strategy that the bank has implemented for this is differentiation.

Although all the banks in the industry offer the same services, M&T bank has tailor made its banking product to ensure that its customers come to it again and again, and that new customers keep flowing into its banking halls. One way it has differentiated its banking service, is through offering financial consultancy to its clients, when a customer applies for a loan with the bank, he/she receives substantial financial advice from the bank’s financial consultancy team, and this ensures that the borrowed funds are invested in proper paying projects. The high returns received from the investments benefit both the bank and the private investors.

The bank has very limited cases of defaulters; its loans are always paid in time, and this ensures that its profit base is not shaken. The customers have in turn developed loyalty to the bank, through this. Another differentiation procedure that the bank has used in recruitment and training; the bank recruits highly qualified staff; the staff undergoes regular training for organizational development and to maintain the banks organizational culture of good customer relations, these qualified professionals provide very high quality banking services to the clients. The customers are held to the bank by the high quality of the services they receive from the bank’s staff. This way the bank has been able to beat the competitive rivalry from its competitors, Porter (1998).

Threat of new entrants

The liberalization of the banking sector in the United States has made it easy for new banks to enter the banking sector. The legal requirements required to invest in the banking sector are relatively low; the time and costs are not very high either, and this makes it very easy for new entrants to join the market. There are very few barriers that hinder new banks entering the sector, and; therefore, this increases considerably the level of competition in this sector.

The M&T bank has addressed this competitive issue by investing highly in R&D. Whenever new firm join the market; they will have limited economies of scale to catch up with the level of innovation of the market pioneers. The M&T Corporation has recruited outstanding talent in its R&D department; it rewards highly innovative employees to maintain the spirit of innovation in the department, which continuously comes up with new techniques of improving the organizations services. Despite the threat of entrants to the sector, the M&T bank has maintained its competitive advantage through its innovation strategy, which has always kept the new entrants behind it, Porter (1998).

The organization can improve its competitive strategies in future through extensive use of technology in all its areas of operation. Technology is one way through which an organization can substantially cut down its cost of operation; technology is not limited, new technologies can be discovered by the day, what the bank should do is to increase its investment in research and development. The bank can easily do this because it has acquired high economies of scale than majority of its competitors. Discovering new ways of doing things will make the bank the market leader and the competitors will only have to follow its actions.

External threats and opportunities available for the organization

The main threat that the M&T bank faces is rivalry from its competitors. Liberalization of the banking sector means that new entrants keep on entering the banking sector. This is major threat to the bank because if it does not take the necessary measures to maintain its competitive edge, it may lose its market share to its competitors. The organization can address this threat through the differentiation and innovation strategies. Differentiation of its services will make them suit the customers best, and thus it can maintain and attract new customers. Innovation will enable the bank come up with new products not provided by its competitors and thus its competitive advantage will be enhanced.

The biggest opportunity available to the bank is the large pool of customers in the United States; the bank always has chances of increasing its market share. It can do this by enforcing strategies which attract new customers, for example; it can use the corporate social responsibility program to improve its image and reputation in the nation. Good image will attract new customers because every one in the community will like to be identified with the bank. The innovation and differentiation strategies will also enable the bank to reap the best from the large pool of customers. Differentiated products will attract and retain new customers; innovative services will make the existing customers to stay while new customers will want to move in with the organization to have a taste of the new services.

Strengths and weaknesses of the organization

The greatest strength of the organization is in its pool of talented labor force. The bank has a very qualified staff which gives its customers the best services. The bank can reap best from this strength by regular training of its staff to catch up with OD requirements. The management should also ensure that the employees are well motivated to work by using motivational tools, such as the Maslow hierarchy of needs to ensure individual needs of each employee are met. This will make the employees to work towards achievement of the organizational goals. The weakness identifiable in the organization is the weakness of its organizational. Its vertical communication channels are inhibited.

The interaction between the junior and senior staff is hindered; this makes team work difficult for the organization.  Important information from the employees does not reach the management; this pulls back the organization in its operations. The organization should realize the importance of a healthy organizational culture. It can create a healthy organizational culture through involvement of its employees in key decision; this will make them feel part of the organization and, they will consequently work in line with the organization’s goals.

Resources, capabilities and core competencies of the organization

The organization has a wide pool of resources including its human resources and its capital; it has a wide network of Automatic Teller Machines across its region of operation which enhances its service delivery to its customers. It has also qualified human resources who ensure proper customer service. Capabilities for the organization exist in the room available for increasing its client base; it has all it takes to do this. Due to its  long presence in this sector, the organization has acquired economies of scale that enable it to operate at a low cost than its competitors, it can, therefore, easily fund customer attraction initiatives such as R&D to improve and create new products to attract new customers.

The core competencies in the organization exist in its human resources. It has the necessary personnel that can propel it towards achievement of its goals. The organization can create value in its value chain, first by resources; it can increase its internal controls to improve management of its resources, and consequently management of its inbound logistics. The key competencies can be used to create value in operations, in the value chain; the organization can realize the best from its staff through motivation, and this can increase their motivation and consequently more value added to the value chain. The capabilities can be realized through improving its marketing and sales activities in the value chain, this can enable the organization acquire more clients and, therefore, realize more value in provision of its services, Harvard business school press (2000).

References

Harvard business school press. (2000). Harvard business review on managing the value chain.  USA: Harvard Business Press

M&T bank, DOI: https://www.mtb.com/aboutus/Pages/Index.aspx. Retrieved on 26th July 2012

Porter, E. M. (1998). Competitive advantage: Creating and sustaining superior performance.     New York: Free Press

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