{"id":20,"date":"2016-10-02T15:23:35","date_gmt":"2016-10-02T22:23:35","guid":{"rendered":"https:\/\/blogs.ubc.ca\/derekwu\/?p=20"},"modified":"2017-01-28T17:34:05","modified_gmt":"2017-01-29T00:34:05","slug":"20","status":"publish","type":"post","link":"https:\/\/blogs.ubc.ca\/derekwu\/2016\/10\/02\/20\/","title":{"rendered":"Commerzbank to change their strategy in the financial arena; are their decisions the right ones?"},"content":{"rendered":"
\"The
“The headquarters of Germany’s Commerzbank are photographed behind the Euro sign in Frankfurt, Germany, September 30, 2016.” REUTERS<\/a>\/Kai Pfaffenbach<\/figcaption><\/figure>\n

In hopes of coping with negative interest rates, Commerzbank, Germany\u2019s second largest bank, recently announced a massive restructuring. The process will last until 2020, cutting 9,600 jobs and costing \u20ac1.1 billion. The bank will merge its major units and to focus on two customer segments: corporate clients and small-businesses. There will be a suspension of dividends after 2016 payments.2<\/sup>\u00a0The bank is expecting \u201ca small net profit\u201d for 2016. Through restructuring, Commerzbank aims to reduce operation costs and create a cost-effective structure by simplifying the structure of the bank and by reducing trade activities, to \u201c[evolve] into a digital enterprise\u201d by investing in digitalization, and to raise market shares.1<\/sup><\/p>\n

Commerzbank\u2019s new strategy seems promising as they use their new strategy to overcome the threats of the sharply fluctuating markets and weaknesses within their cost structure. In the idea of Transient Advantage, a successful company \u201cmust be willing to honestly assess whether current advantages are at risk\u201d.3<\/sup> In Commerzbank\u2019s case, they see that their cost-structure as a competitive advantage is at risk, therefore they are calling to restructure to simplify their cost-structure. It is important for Commerzbank to refocus their key activities through the disengagement3<\/sup>\u00a0of certain products to better deliver their value propositions. Porter mentioned in his article, What is Strategy<\/em>, \u201coperational strategy and effectiveness are both essential to superior performance\u201d.5<\/sup> Commerzbank\u2019s simplification may allow for better operational effectiveness, while they try to launch, ramp-up, and exploit3<\/sup>\u00a0new advantages allow for better operational strategy. Because the competition for banks in Germany is extremely fierce at the moment2<\/sup>, Commerzbank made the right decision to work on their competitive strategy.<\/p>\n

Stakeholders at risk of the restructuring of Commerzbank may include customers and clients, shareholders, and employees. The employees will be affected the most as many will lose their jobs. The massive job cuts may pose an ethics issue. A large group of people will now be unemployed and with the banking industry\u2019s instability and sharp fluctuations4<\/sup>,\u00a0there may be some difficulty for these people to find jobs afterwards; however, conversely if Commerzbank continues with an inefficient cost-structure and decreasing revenues, the bank may fall into trouble, resulting in possibly jeopardizing even more employees.<\/p>\n

Word Count: 361<\/p>\n

References<\/strong><\/p>\n

1 Commerzbank. “Commerzbank 4.0.” PDF file, 30 Sept. 2016.<\/p>\n

2 Henning, Eyk, and Ulrike Dauer. “Commerzbank to Slash Jobs, Scrap Dividend in Broad Revamp.” The Wall Street Journal<\/em>, 29 Sept. 2016, www.wsj.com\/articles\/commerzbank-to-slash-jobs-scrap-dividend-in-broad-revamp-1475139832. Accessed 2 Oct. 2016.<\/p>\n

3 McGrath, Rita Gunther. “Transient Advantage.” Harvard Business Review<\/em>, PDF ed., 2013, pp. 62-70.<\/p>\n

4 Melby, Caleb, and Angela Cullen. “Fines, Withdrawals, Job Cuts. It Was an Ugly Day for Global Banks.” Bloomberg<\/em>, 29 Sept. 2016, www.bloomberg.com\/news\/articles\/2016-09-29\/from-deutsche-bank-to-wells-fargo-a-bad-run-for-giant-lenders. Accessed 2 Oct. 2016.<\/p>\n

5 Porter, Michael E. “What Is Strategy?” Harvard Business Review<\/em>, PDF ed., 1996, pp. 61-78.<\/p>\n

Image Source<\/strong><\/p>\n

Pfaffenbach, Kai. “The Headquarters of Germany’s Commerzbank Are Photographed behind the Euro Sign in Frankfurt, Germany.” Reuters<\/em>, 30 Sept. 2016, www.reuters.com\/article\/us-commerzbank-restructuring-idUSKCN11Z13T. Accessed 2 Oct. 2016.<\/p>\n","protected":false},"excerpt":{"rendered":"

In hopes of coping with negative interest rates, Commerzbank, Germany\u2019s second largest bank, recently announced a massive restructuring. The process will last until 2020, cutting 9,600 jobs and costing \u20ac1.1 billion. The bank will merge its major units and to focus on two customer segments: corporate clients and small-businesses. There will be a suspension of … Continue reading Commerzbank to change their strategy in the financial arena; are their decisions the right ones?<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":42253,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1903946],"tags":[7982],"class_list":["post-20","post","type-post","status-publish","format-standard","hentry","category-markets-and-finance","tag-comm-101"],"_links":{"self":[{"href":"https:\/\/blogs.ubc.ca\/derekwu\/wp-json\/wp\/v2\/posts\/20","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.ubc.ca\/derekwu\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.ubc.ca\/derekwu\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.ubc.ca\/derekwu\/wp-json\/wp\/v2\/users\/42253"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.ubc.ca\/derekwu\/wp-json\/wp\/v2\/comments?post=20"}],"version-history":[{"count":14,"href":"https:\/\/blogs.ubc.ca\/derekwu\/wp-json\/wp\/v2\/posts\/20\/revisions"}],"predecessor-version":[{"id":63,"href":"https:\/\/blogs.ubc.ca\/derekwu\/wp-json\/wp\/v2\/posts\/20\/revisions\/63"}],"wp:attachment":[{"href":"https:\/\/blogs.ubc.ca\/derekwu\/wp-json\/wp\/v2\/media?parent=20"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.ubc.ca\/derekwu\/wp-json\/wp\/v2\/categories?post=20"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.ubc.ca\/derekwu\/wp-json\/wp\/v2\/tags?post=20"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}