Identifying strategic issues and options of the organization requires close analysis of its external and internal macroenvironments. The scope of this assignment covers detailed analysis of Australian Securities and Investments Commission (ASIC), its current problems, and areas for growth. Prior to deriving insights regarding ASIC’s strategic issues and options, it is essential to understand the sources of competitive advantage of the commission’s internal resources.
As collectively agreed upon with the colleagues, this part of the project will apply VRIO framework. According to Barney (1991), the organization’s sustained competitive advantage is formed through four essential types of resources: 1) valuable; 2) rare; 3) inimitable; 4) organized. The sustained competitive advantaged is maintained only if all four of the conditions are met. This document encompasses the VRIO model framework analysis of ASIC in response to the current trends and strategic growth opportunities.
Valuable
It is evident that ASIC adds value by facilitating technological advancements that bring benefits to a wide array of stakeholders, including consumers, investors and markets. The commission mitigates the potential harm of technological alternations, maintaining security, safety, and operational failures (Australian Securities and Investments Commission, 2019). Through the raised industry standards, the market integrity rules review potential risk concentration and implementing the existing infrastructure. With the minimized risk of operational failure, ASIC brings value by monitoring domestic and global trends to minimize economic or financial shocks that are positively correlated with the market volatility.
The commission increases the perceived customer value through promoting positive behavior in the entities and enhancing financial outcomes. It has special relationship with Financial Services Royal Commission, integrating order and proposing policy advice on the basis of obtained tools and power (ASIC, 2019). ASIC also adds value by taking direct court actions and testing the boundaries of legal obligations via the usage of transparent methods to deter poor behavior (ASIC, 2019).
The commission is actively contributing to the comprehensive paradigm of knowledge within the financial services structure through close collaboration with Australian Financial Services (AFS). It does not only use regular communication channels to promote better practices but also issues newly revised guidelines on the in-depth market research.
Apart from expanding the current knowledge paradigm, ASIC conducts intensive surveillance and enforcement activities to prevent the occurrence of poor behavior and misconduct. The direct value arises with the decreased percentage of unfair treatment of consumers, lack of professionalism, and misconduct in superannuation funds (ASIC, 2019). Poor governance practices and poor culture that leads to misconduct, along with fraudulent behavior are addressed all together with the ASIC actions. Through targeted enforcement actions and direct support of the market security reforms, the commission combats market developments that compromise trust, confidence, and integrity of the business (ASIC, 2019). Such effective employment of the penalties and powers acts as a highly beneficial regulator of the law reforms (ASIC, 2019). The aforementioned characteristics signify the high value of the commission in the industry.
Rare
Since ASIC meets the first criteria of the VRIO framework (value), it is necessary to put the commission through the scrutiny of the second point – rarity. ASIC is arguably one of the few commissions that can perform to the high capability in the industry, combining that many features at once (ASIC, 2019). With the projects focused simultaneously in the cross sector, credit, retail, banking, investment, infrastructure, and supervision and others, the commission acts as a unique asset, implementing a wide array of functions, generally inaccessible to the market competitors. With the specific purpose of helping Australians to gain control of their financial spending, the commission oversees the variety of behavioral components that constitute individual financial decisions through research, education, and other regulatory tools that enhance financial autonomy.
What makes ASIC even more rare is the combination of awareness programs with consumer help programs, where close attention is paid to the consumer segments that suffered from poor financial decisions. ASIC is rare in its organization as it collaborates with different social branches, including but not limited to the government, community, research, and business (ASIC, 2019). To increase the level of awareness and customer satisfaction, the commission works from within, supporting both formal education sector (research/academics) and informal awareness leadership programs.
ASIC is not alone in its mission, as it cooperates with other partnership programs. It is rare in its cooperation strategies as it delivers initiatives through close work not only with internal stakeholders but also with external ones, such as government agencies (ASIC, 2019). Rarely the commission of such level is in full capacity of influencing cross-border agendas or promoting financial advancement instead of regulatory support.
Yet, ASIC addresses effectively and appropriately the needs of both the consumers and investors who deal with culturally diverse communities. It is unique at its core to spot an outreach program, aimed at improving the financial acumen of in-reach community (ASIC, 2019). Most importantly, current market research of the colleagues on this project shows that ASIC has virtually no market rivals competing at the level of exhibiting all of the aforementioned functions.
Inimitable
Proven to be both valuable and rare, ASIC is also costly to imitate. The services that the commission provides are hard to buy or substitute at the reasonable payment rate (ASIC, 2019). The combination of wide array of services, described in the “rare” section suggests that neither direct imitation nor the provision of the comparable product/service is possible. ASIC is inimitable for the variety of reasons, such as historical conditions, social complexity, and causal ambiguity (ASIC, 2019).
To start with, ASIC strategy and scope of activities have been formed over decades. Resources that were developed over a long period of time are usually more costly to duplicate than those achieved in a short time framework (ASIC, 2019). Social complexity of the commission is explained through the organization’s culture, interpersonal relationships, and interaction with different stakeholder groups (ASIC, 2019). The rare intertwining of services and goals followed by the commission stand for the causal ambiguity of ASIC, where its rival markets cannot identify particular resources of competitive advantage.
When analyzing the inimitable resources, it is essential to distinguish between tangible and intangible resources. Tangible assets, proposed by ASIC, are not very difficult or costly to imitate, as the organization does not propose significant or strategically important physical things (ASIC, 2019). Instead, the intangible assets of the commission, such as trademarks, intellectual property, and brand reputation are unique and cannot be duplicated. One of the direct sources of ASIC’s competitive advantage is a unique way of performing tasks which undergoes the socially complex process of forming responsive resources for customer success (ASIC, 2019).
For other companies, it is hard to identify the particular processes laying behind the task performance which makes the attempts for duplication even more complex. The last aspect that deserves special attention in terms of inimitability is the increase of enforcement actions and establishment of ASIC’s role as the primary superannuation regulator (ASIC, 2019). Continued under the regulation of the Financial Services Royal Commission, ASIC remains inimitable with the expanded CCM program and intensive external and internal supervision on the executive accountability.
Organized
Apart from the three aforementioned characteristics, ASIC is highly organized. With the definite plan, divided into specialized segments, the commission determines criteria for strategic management process in organization. It also establishes effective motivation and reward systems in place, recognizing innovative ideas aimed at improving the organizational structure (ASIC, 2019). ASIC’s sustained competitive advantage is maintained through the presence of satisfactory management and control systems (ASIC, 2019). The commission’s processes, policies, and structure of the organization fully realizes the potential of its resources, combining their value, rarity, and inimitability.
It is also essential to note the highly efficient intensive supervision organization process that supports early intervention strategies. Dealing with risk management failings that increase the consumer harm, ASIC uses advanced market structure which allows the organization to identify issues early (ASIC, 2019). The commission’s supervisory approach is well-organized as it regulates and enables the administrators to adapt rapidly to the everchanging market situations (ASIC, 2019). Furthermore, the prompt organization of the system elevates the key decision makers in the industry, shifting the program’s focus on potentially reportable breaches of laws in the field of financial services.
In terms of organization, it is also critical to understand the internal dispute resolution arrangements to achieve timely remediation and rectification of the customer complaints. ASIC achieves the sustained competitive advantage with the proxy indicators present in the process of virtual systems issues resolving (ASIC, 2019). The commission undeniably maintains high organization in terms of public reporting, regularly publishing the observations of the firm practices annually (ASIC, 2019).
Despite the complex financial services entities system, the monitoring of the program and additional areas of supervision focus do not intervene with the thorough organization of the financial structure. With the well-established corporate governance culture, the area of ASIC’s focus is under continuous review of the various industries.
Insights
Though the VRIO framework outlines the sustained competitive advantage of ASIC, it is important to understand that the commission involves a series of strategic issues and opportunities. Some of the company’s strategic issues are poor design and irrelevant sale of investment products for protection (ASIC, 2019). Concerned about raising awareness on smart financial decisions, the commission is closely associated with problems in inappropriate sales and investments. Despite the active efforts of the ASIC’s community, the aforementioned problem remains prevalent with few ways to address it in a limited time period (ASIC, 2019).
Another strategic issue is the inappropriate sale of credit products that have limited access for small to medium-sized businesses. With the poor performance in financial markets explained by the lack of competition and further structural challenges, the conflict of interest becomes predominant. The last strategic issue identified is poor governance, wherein boards, investors, and executives show lack of professionalism, lack of responsibility, and corporate culture.
ASIC developed a detailed strategic plan for 4 years to address the outlined issues from different industry angles. The key priorities of the commission extend to the prioritization of the recommendations and referrals, delivery of the superannuation conduct regulator, and addressing of the insurance harm (ASIC, 2019). Improved governance and accountability is achieved through the protection of vulnerable consumers where poor financial advice outcomes are resolved in a timely manner. High-deterrence enforcement actions, in this case, come as a result of regulated entities that are not overseen by ASIC’s misconduct regulatory priorities.
ASIC has an extensive array of strategic opportunities to minimize the impact of harm made to vulnerable consumers through the prioritization of work. As a part of its mission, the commission can grow in the area of combatting unfair treatment of consumers who face hardship and irresponsible actions by financial services providers. Intensive and enhanced supervision of key firms is yet another opportunity to grow for ASIC and improve their governance and accountability (ASIC, 2019). Closer attention should be given to the enforcement cases that implement the outdated accountability regime with proven instances of governance failures that could result in consumer harm.
Conclusion
In conclusion, the VRIO framework of analysis proves that ASIC has a sustained competitive advantage over its market rivals. Bringing extensive value to the market, remaining rare, and costly to imitate, the commission is highly organized in its function, delivery, and operation. The internal analysis of the sustained competitive advantages shows that ASIC has a wide array of strategic issues and opportunities that are carefully defined in the annual reporting.
Over the course of 2019-2023, the company deals with the issues of inappropriate sales, investments, and crediting. While the list of strategic issues is challenging to tackle, the identified number of key priority areas provide sufficient evidence to argue that ASIC will be able to overcome the problems. With the generous mission and vision, the commission serves an important function for the community. Therefore, close collaboration with the government officials, businesses, and education sectors leaves hope for the utmost success of ASIC in the upcoming 4 years.
Reference List
Australian Securities and Investments Commission. (2019) Asic corporate plan 2019-23. Sydney: Australian Securities and Investments Commission.
Barney, J. (1991) ‘Firm Resources and Sustained Competitive Advantage’, Journal of Management, 17(1), pp. 99–120. Web.