SunTrust Banking Industry: Founded in 1811, HQ in Atlanta, GA

Executive Summary

SunTrust is a Banking industry that was founded in 1811. Its headquarters is in Atlanta, Georgia, in the U.S and it has about 1,800 branches in the Southeast of the United States.

SunTrust employs more than twenty-eight thousand employees, and as at 2009 financial year, it earned revenue of 10.4 Billion US Dollars.

The bank offers both retail and commercial banking, among other services such as mortgages, insurance, credit cards, and asset financing. The industry has been doing so well in the US, and it is high time it considers international expansion.

It should consider making organic expansion in the Australian market. Australia is a country that has undergone a rapid economic growth rate in the recent past. The economic growth is a major determinant in deciding g on whether to invest in the country.

Australia has highly modern developed infrastructures; these are in terms of transport and communication.

The systems are advanced so well that access to the country from any corner of the world is highly enhanced; the airports, the seaport, and internal transport are well managed and accessible.

The communication network within and without is of high-tech. This is an asset to the industry since it reduces the cost of doing business.

On the other hand, the international market is enhanced at all lengths. SunTrust strength is ventured in its strong brand name that is internationally recognized. There is wide recognition of its products in all parts of the world.

The strength of the company is undoubtedly engineered by its internal managerial mechanisms, the companies it has acquired, and its close relationship with the Coca Cola Company.

To have a competitive edge in selling its product and services, it will be advisable for the company to take advantage of its ability to compete favorably with equal players in the market. A strategic marketing plan is the only way out.

No one company is perfect; there is always an area that offers a weak point. One of the weak points that the company will have to go through is internal while others are from the external environment.

Weaknesses refer to stumbling blocks that may deter the company from progressing towards a particular direction. With a strategic plan, it will be easy to decide the material flow, technology to use, process selection, inventory required, and the capital needed.

Operation management has the responsibility of setting the policies that define expected labor standards. Employees play the biggest role in production processes, their skills, knowledge, and abilities should be put into consideration.

In the recent past demand, the drift has been strongly pulling the market. Few movements have emerged which are linked with most of the clothing producers with well-distinguished brand names and the wholesale operations.

There is, therefore, need for all companies in the sector to have strong access to the details of sales data. Having the necessary details will not only quicken the production planning but will also provide information about customers tastes and preference.

Key Issues

The company already has a strong brand name. This is an upper hand in positioning itself in the new market. Other than the company itself, the companies that it has acquired are also doing well.

There is the expertise that the company boasts of. This is gotten from the acquired companies and the developments that have been taking place over the years (SunTrust web site, 2011).

Using this, the company should come up with measures that are aimed at countering competition by offering quality to the clients. Other key issues include;

• the close relationship between its suppliers and distributors
• a close relationship with the Coca Cola Company
• expanded markets in the social and cultural contexts
• use of high technology which has been rising over the years leading to success in all its activities, for instance, online and mobile banking.
• an effective procedure is followed to establish new and attractive ideas for the success of the company.
• strong marketing operations- through vertical & horizontal integrations

Mission, Vision, and Corporate Objectives

Mission Statement

Assist people and other institutions to prosper, provide quality financial services that meet the needs and expectations of our clients, communities, and colleagues, as well as enhance their lives through our diverse range of services (SunTrust web site, 2011).

Vision Statement

To be the leading banking industry not only in the United States but all over the world

Corporate Objective

Corporate objectives are statements that identify plans within an organization that need to be improved. This includes both long-term and short-term goals.

For them to be achievable, they have to be SMART (Specific, Measurable, Attainable, Realistic, and Time-bound). The following are some of the corporate objectives for SunTrust.

Customer Loyalty

The company aims to make and retain its customers through appropriate marketing, advertising, and customer services.

To do this, there is a call center that operates 24hours in a day and handles customers’ complaints (Shane, 2003). The company aims to have a customer-company intimate relationship to derive a win-win situation.

Profit

It uses the 4Ps of marketing where it ensures that there are affordable products to all its customers when they need them.

Growth

SunTrust is an international company that targets global markets. To remain competitive, the company aims at having a high growth than its competitors and has its products distributed all over the world. In doing this, the company is in the process of establishing new markets in Australia

Commitment to Employees

The company respects its employees and has made policies aimed at getting employees loyalty. The rate of compensation is high, and the employees’ view is respected.

The human resource department is given the mandate of ensuring that adequate employees are available at all times. It has the mandate of planning, deploying, employing, training, retaining, and dismissal of employees.

Situational Analysis

Internal Analysis

SWOT Analysis

Strengths

1. High competitive advantaged that has been earned through Acquisition of highly competitive companies such as MBNA Corporation
2. Vertical and horizontal integration chain– effective distribution channels that reduce costs & improves cash flows.
3. Effective management– training, motivating & reviewing staff. Also outsourcing
4. Marketing power & growth- strong brand creation through cross-promotion (Haberberg & Rieple, 2001).
5. Strong balance sheet- stable liquidity & average debtor/creditor days reduced.
6. Tax advantage in different countries- lower corporate taxes.

Weaknesses

1. Disappointing financial returns – asset, investment & equity returns
2. Debt to Equity financing – future risks of high borrowing & cumulative interest
3. Inconsistent growth & income revenue – cyclical results.

Opportunities

1. International business expansion
2. Market development
3. Increasing technological advancements
4. Emerging markets

Threats

1. Global competition
2. Intense rivalry
3. Political problems
4. Price competition

Opportunities for the company are dependent on both the internal and external assessment criteria of the company’s profile of the operation.

Similar to the weaknesses discussed above, the company can still optimize the various opportunities available to bring about sustainable growth through effective competition.

Some of the underlying opportunities for this company regarding the macro environment are the diversification of its activities. The company may opt to not only run on a large scale but also produce a variety of products.

This concept of variety may be approached from different angles like micro lending’s via collaboration with local banks. In striking for the right opportunities, the company will have to analyze its main market rival.

The strategies being employed by the competitor should be critically assessed and evaluated for necessary counteraction. Also, the general plan of the competitor in a bid to control the market is a vital toolkit which this company can use to estimate the competitive edge of the market.

Core Competencies

The distinct competencies such as growing economies of scale, experienced workforce and effective supply & distribution links all contribute to cost efficiency (Shane, 2003).

Its close relationship with the Coca Cola Company has had a positive influence on its clients given that Coca Cola Company is the largest manufacturer and distributors of soft drinks and nonalcoholic drinks in the world.

From its initial existence, SunTrust has developed its strategy through; Market Penetration, Consolidation, Product development, Market development, and related diversification.

It has therefore capitalized on its core competencies through vertical integration, horizontal and geographical diversification.

In line with its marketing strategy, SunTrust has achieved diversification inorganically through acquisitions, strategic alliances, and the associate program, as well as organically through new product development and technological innovation.

HRM Analysis

The diversified organizational culture establishes an effective team of highly qualified and skilled people through;

• Effective training & development- ensures smooth business operations
• Management & motivation- extrinsic & intrinsic motivation.
• Teamwork- selection and combination of people to solve corporate problems.

PESTEL

Political

The global financial crisis has compelled countries to relax their trade barriers. This is a good thing for the company since it can expand into other countries. This will increase the market base.

Economical

In the past decade the world’s economy has been on the low pace with many countries recording a negative rate. The world has recorded a positive rate since the great depression Era. Even if the rate today is not so good there is hope, and thus a risk taker can as well diversify his business.

Social-cultural

Many people believe in SunTrust products because they are of high quality and reliable. They are however willing to trade with current technologically improved products (Shane, 2003). There are no threats as far as the social environment is concerned if the correct technology is adopted.

Australian population and the world population are on the rise where the numbers of youths who are enlightened are on the rise. Diagram 1 shows the trends in the population of Australia.

On the other side, office spaces are becoming limited, and the existence of briefcase companies are increasing. If SunTrust is to succeed in its new market, it has to focus more on the online market rather than opening new branches which might be a hard task

Technological

Technology is not stagnant and more is expected in the future. The competitiveness of the company will be dependent on the efficiency of technology that it will implement.

Legal

The important thing is to comply with the particular country it invests in laws and regulations.

Environmental

• Natural disasters
• Environmental awareness
• Environmental lobby

The external forces outlined above could help determine the retailer market growth or decline and the implications for an industry like SunTrust, which has a rapidly evolving business model that responds to trends in the economy, technology, and the industry in general.

An economic downturn could see economic factors having a considerable bearing on future strategies through ripple effects on socio-cultural and political factors.

Furthermore, if the US Congress and other states successfully challenge current state tax policies as New York has done, it could have a significant impact on SunTrust’s operations.

That being the case; lower tariff barriers have improved international trade particularly with emerging markets like China. US’s economic growth potential due to its demographic advantage could, therefore, open up opportunities for industry development.

Industrial Analysis

Internal Managerial Mechanism

Management is the driving force of an organization the kind of approach that they give to different issues dictates the success of an organization. Decisions are the driving force in an organization. The quality of the decision that managers make give their organization direction and focus.

The growth and competitiveness of SunTrust are influenced by the quality as well as acceptability of decisions made by managers at all levels. The strength of this company is undoubtedly engineered by its internal managerial mechanisms.

To have a competitive edge in selling its product and services, it will be advisable for the company to take advantage of its ability to compete favorably with equal players in the market (Mintzberg et al. 2003).

Business Risk

Business risk is the uncertainty as to whether the kind of business that the company has engaged in will be successful. This affects an existing business when it wants to extend its business to other areas or to start up a new business.

SunTrust is faced with the risk of a reduction in net income since in 2009 it made a net loss of over one million US dollars.

Cooperation

There is facilitated communication between company employees (internal communication) and external communication. It is worth noting that business communication is vital for success in all businesses.

Success in this context means, being able to accomplish a particular task or to achieve the corporate objective. Government policies in Australia also restrict multinational dominance as this restricts the growth of their domestic businesses.

Market Analysis

Over the years, the banking industry has been undergoing a substantial change. This has been as a result of the increase in competition globally and the change toward global supply sequence.

The end users play a major role in terms of selection of suppliers and in decision making of products which is changing from being operational to being strategic. The increased number of retailers resulting from the emergence of new entrants in the market has led to increased competition.

Consumers have become choosy due to the increase in the number of product options in the market. They now desire for an exciting offer and easy banking services.

This has led to increased operation cost on the side of retailers trying to match up with the customer need. It is the work of the operation management to utilize the scarce resource and maximize returns.

Porters 5 Analysis

Suppliers

• Supply of foreign distribution links
• Inexpensive supply of sophisticated technology
• Low Switchover costs – Firms within this industry are vertically integrated. Dependence on foreign/domestic supply is minimal
• Risk of forwarding integration

Buyers

• High Buyer Concentration- leads to price wars & high competition
• Short Contracts- Buyers can switch to alternatives rapidly
• Inexpensive switching costs- customers can switch-over effortlessly
• Backward Integration- threat removed since the industry is diversified

Potential entrants

• Government restrictions on monopolistic firms
• Greater economies of scale-out performance
• Expensive– high set-up costs
• Diversification- acceptable quality survives, can be easily imitated

Substitutes

• Rising demand for substitute products
• Growing user related banking products

Competitive Rivalry

• Diversified international companies
• High exit barriers

Marketing Objectives

The company has gained recognition in the US market and aims to enlarge its leadership in the banking industry in the competitive Australian market.

To attain this noble general objective, the company aims at analyzing the market and segmenting the market into smaller units (Mintzberg et al. 2003).

From its positioning statement, the company aims at creating a human-technological interface where it approaches its strategies from a psychological angle. It poses to give solutions to people and by so doing it can market its products effectively. Some of its specific objectives would be;

1. To increase the sales revenue to £12 by the end of 2011.
2. To increase its market share to 50%.

Market Leadership

SunTrust Banks, Inc aims at being the world largest banking industry. To attain this, it has to improve its products with the needs of customers. It has a research department which advises it on the kind of products or services to offer for better customer satisfaction.

Market Segmentation

A customer is the backbone of a company; the main decision that a marketing manager should make is on a company’s market segment. A market segment is a homogenous subset of the main market, which shares similar characteristics that make it demand similar goods.

A segment is also stimulated by similar innovations. After developing a marketing segment the next step is to develop mechanisms that will enable one to sell in the target market. One of the ways to enter the target market is the marketing mix.

Marketing Mix

An effective marketing mix ensures that goods are available to the target customer when they need them and at an affordable price. In Australia, before the company decides on a particular market, the first point is to collect adequate market data and analyze it.

The company uses business intelligence tools to collect a wide range of data essential for its operations. Data is then interpolated in terms of age, sex, region, education, income, and lifestyle.

This assists the company in identifying the products that it will develop if it has to remain competitive. Its research centers offer great assistance in ensuring that all is set in terms of data available for decision making.

Price

• Competitive international pricing strategy
• Price-wars- Price-ranges (Customers select products & the price range that suit them).
• Limit pricing strategies

Promotion

• Cross-advertising advantage (vertical integration)
• Service promotion through the corporate image (efficient products)

Products

• Diversified range products.
• Inter-linked products for customer use Delivering the content that customers desire (identifying customer preferences through surveys)

Place

• Open market operations (expansion through mergers/acquisitions)
• Effective distribution channels through advanced technology
• Accessible locations

Marketing Strategies

SunTrust’s superior marketing strategy complements its mission statement and has seen its product is well positioned in the market. The company’s reputable brand name is a source of competitive advantage as it lures customer traffic.

Corporate diversification through growth further boasts the marketing strategy, creates a strong brand name, and targets a wider set of customers through introducing the use of new mediums.

Growth strategy

Expansion of the company’s product in the international market could ensure increased returns. By capitalizing on its existing potency and unique resources, the company could effortlessly gain a competitive advantage in Australia and realize high returns on the capital invested.

Given that Australia’s economy is forecast to surpass most of the world’s economies. This strategy could be the gold mine that SunTrust needs to improve the balance of its portfolio and to boost its international profit margins

Research and Development

To have a sustainable competitive advantage, there is a need to improve the products with time. The company will have a research and development team which will be mandated to survey the market and advice the management on measures to take to ensure that it remains competitive (Anctil, 2008).

Market Development/ Expansion

Grow in new markets with existing services. E.g., Australia (has a growing GDP)

Introduction of new products and services

SunTrust’s innovativeness is facilitated by the use of decentralized structures where managers allowed to experiment with new by-products. An effective procedure is followed to establish new and attractive ideas for the success of the organization.

Some times it is not able to make the expected profit margins due to the competition. It has an opportunity of merging with global retailers and to expand into other countries.

Promotion

Using different modes of promotion (such as newspaper, TV, and internet) to launch its products in the new market. Promotions are done in the effort to either introduce a new product or increase the market segment.

To engage in a promotion, the first thing to understand is the availability of the target customers. Where are they likely to be found? Are they free in the mornings, is it in the afternoon?

After realizing their availability and the fact that they can give you time to sell your products, then it’s good to know the age of the market. The existence of opinion leaders should be evaluated. The customers are likely to follow the opinion leaders in making their decisions.

The existence of groups in the society and their matching lifestyles can also be of great use. The way the consumers react is that they will follow the others. Investment should be made in this.

If the promotion is for an already existing product in the market, the approach should be from the angle that we are thanking our customers. If the customer feels appreciated and recognized he will develop loyalty and influence others to follow his way.

Financial Feasibility

Projected Income, Start-Up, and Operational Costs

The following is the projected incomes and operational cost for the initial year;

• Name of translation Expected Amount (in Us. Dollar)
• Capital 3,000,000
• Expected sales of the first year 1,200,000
• Operational costs 1,200,0000
• Taxation costs 0.00
• Salaries and marketing expenses 100,000
• Net profit (100,000)

Operational cost includes costs that are incurred in the normal operation of the business; they include depreciation, electricity, medical expenses, and transport. This amount includes all expenses except salaries and distribution expenses.

Capital budgeting is ensuring that the finances available for various long term developments are utilized in the most efficient way. In our case, we have a budget of $ 300 thousand that should be used to finance the proposed business strategies and meet the objectives.

This money can be divided into two:

1. Capital good purchase
2. Operational expenses

Break-even, Cash Projections, and Return on Investment

Break even, is the point where business expenses and income got from a business is equal. At this point revenue derived from a business is equal to costs incurred in production;

At Breakeven point then

Cost = revenue

That is Revenue – Cost =zero

Profits are only realized when revenue exceeds the cost.

It is expected that from the second year, the company will surpass its costs. This is the time that profits will be realized. Cash projections for the next five years are as follows

Expected sales Expected profit

• Year 1 1,200,000 (100,000)
• Year 2 2,000,000 340,000
• Year 3 2,200,000 360,000
• Year 4 2,530,000 400,000
• Year 5 2,670,000 500,000

The projected cash flow is expected to increase with an increase in sales as well as efficiency. There will be increased campaigns to ensure that there is awareness and derive a competitive advantage.

Resource Plan and Time Schedules

The finances to start the business will come from a loan facility that will be procured from Barclays bank. In the loan policy, there is a six months grace period, and the loan term is three years.

• Financial loan 3,000,000
• Interest rate 16% inclusive
• Repayment period 3 years
• Grace period 6 months
• Yearly Installments 1,160,000
• Financing institution Barclays Bank

Alternative plans

Although the Australian economy has been doing so well and the future is promising, SunTrust has to overcome some obstacles before it realizes it’s potential.

First, there is the government requirement which it has to adhere to before being allowed to expand its products, increased capital costs, the requirement of the skilled labor force, and rivalry from other firms.

Corporate diversification through growth further boosts the marketing strategy, creates a strong brand name and targets a wider set of customers through introducing the use of new mediums. To have a sustainable competitive advantage, there is a need to improve the products with time.

The company will have a research and development team which will be mandated to survey the market and advice the management on measures to take to ensure that it remains competitive (Anctil, 2008).

Measurement, Review and Control

Often, marketers are faced with some challenges when it comes to showing results in terms of numbers of the activities they have been involved in as well as the budget consumed.

It is not always the case that a business set up will be successful; there are times that it may fail; when starting a business, this should be taken into consideration. Business dynamics cannot be predicted with a 100% certainty.

If the trend fails to favor business, then the business is likely to fail in meeting its obligation. This may be facilitated by the change of fashion, calamities or negative goodwill created; this hinders continuity of business (Shane, 2003).

To cater for this in eventuality, there is a need to have a control and measurement plan.

Many companies find it difficult to measure performance and even to manage it. For SunTrust expansion in Australia, the marketing department will first prepare a good plan that will be implemented and coordinated so as results can be measured and evaluated easily.

After measuring the results, they will be diagnosed, and collective action is taken to ensure that the product remains in the life cycle.

After the successful introduction of the products in the new market, the marketing department will also be responsible for preparing annual control plans to evaluate the performance of the company in terms of the achievement of objectives.

The market, distribution channels, and customers will be reviewed to ensure that the expected profit margin is met.

Vigorous advertisement and promotional program will also be undertaken to ensure that the products reach the target market which will be audited regularly to ensure that marketing ethics are adhered to and the social responsibility is not compromised.

Reference List

Anctil, E. (2008). Marketing and Advertising the Intangible. ASHE Higher Education Report, 34(2), 31-47.

Haberberg & Rieple (2001). The Strategic Management of Organizations. New York: Prentice Hall.

Mintzberg, L. et al. (2003). The Strategy Process: Concepts, Contexts, Cases. United Kingdom: Pearson Education.

Shane, S. (2003). A General Theory of Entrepreneurship: the Individual-Opportunity New York: Edward Elgar.

SunTrust web site (2011). About SunTrust. Web.