Diagnosing Strategic Problem

During the past six years, there is a bank that had emerged in New York City. It's name is called Commerce Bank. The bank is growing fast. They open branches in the 5 boroughs in a incredible speed. Their customer service is the number one in the industry. But last month, they announced that they are bought by a Canadian bank, TD NorthBank at a very lower price: $42 per share. And an article in the Wall Street Journal commented that Commercial Bank is not in a good position to negotiate with TD NorthBank in this transaction. So, Commerce Bank might not as strong as her growing rate of number of branches. As a Commercial Bank staff for almost 3 years, although I do not know the whole picture of the bank, but I can spot some strategic problems of Commerce Bank.

Firstly, the bank products perceived as relatively substandard. Bank products can be generally divided into consumer loan products, such as credit card, personal loans or mortagages. The second category is depository products such as, money market, CD and savings and checking account. Commerce Bank claimed herself is very conservative in loan approval. They require customer to have an above average credit ranking in order to consider their application. Therefore, the number of approved cases is less than other banks. However, the interest earn from loan to customers is one of the major income to the bank. Moreover, the interest rates offered to depository account clients is also not competitive than other major banks. The outcome is customer switch to other banks and Commerce Bank is not competitive. The marketing team of the bank strongly believe that best customer service can retain customers with the bank, But they ignore that the now a day more important to interest-sentitive cusotmers is the money they earn from their money deposit in the bank.

Secondly, the high employee turnover rate is also a problem to the bank. Commerce Bank business hour is from 7:30am to 8:00pm. Employee are required to work 3 differents shifts rotatingly. However, there is no shift allowance and also the wages are comparatively low in the industry. All together, it is hard for the bank to retain staff and makes them loyal to the bank. Futhermore, the bank heavily rely on part time employee heavily is a problem too. Their loyalty is less than full time employee in general. Commerce Bank needs to hire and train staff in a regular basis due to the high turnover rate. A lot of money and time spend on this process. But I cannot see any remedy to this situation.

Although top management forces every staff in Commerce Bank to provide number one customer services to every customer, however the position of the bank in the banking industry is not strong in term of products and staff morale.