Handelsbanken Case Study

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Culture based on decentralisation and cost-consciousness :

reluctant to engage in large takeovers because don’t want to loose its culture

- Maximize local responsiveness

In banking, offers had to be adapted to the individual customer’s needs and that was best done at the local branch office.Church tower principles

customers could have a direct relationship with the local branch and only larger credit decisions had to be approved by Handelsbanken in London.

- Cost advantages: most cost-conscious bank

Stop spending money in celebrations. Handelsbanken would not spend money on unnecessary things that did not create value for the customers.

Branch managers are eager to keep their costs low in order to succeed in the internal benchmarking with other Handelsbanken branches.

Survived crisis : This was partly attributed to the cautiousness and the cost-consciousness of the local branch managers that had prevented the bank from financing overly risky real estate deals. Thanks to the ‘church tower principle’, the branch managers knew their customers well and understood which deals were too risky to engage in.

Manager of Leeds : culture of cost-consciousness and localised decision-making into practice. Didn’t spend money on art (wife did the painting)

- The firm generally modifies and adapts its products and/or services

Each branch decided which products they wanted to promote given their knowledge of the local market

- Global learning:

example in UK, During the start-up phase, all branch managers received close support from an experienced Handelsbanken manager

- high degree of autonomy for the Subsidiaries

branch manager would be expected to run his or her branch with a large degree of independence, while at the same time ensuring a cost-conscious and relatively risk-averse approach to banking. new branch managers embraced the decentralisation idea wholeheartedly and took pride in recruiting their co-workers and in making practical arrangements for the office.

In a decentralised bank, the branches should directly take all the positive and negative consequences a customer relationship resulted in, in terms of costs and revenues

3. Drawing on the main conceptual frameworks discussed in the class (i.e. Yip, CAGE), what type of strategy (see Barlet and Ghoshal’s framework) do you think would be most appropriate for the banking sector? Please explain your answer.

According to Barlet and Ghoshal’s framework, Handelsbanken is a Multi-domestic firm. Indeed, the firm has low benefits from world-wide integration and has a huge need for local responsiveness.

According to this model, the strategy has to follow those points:

-The firm has to build a competitive advantage through sensitivity and responsiveness to national differences. First, it has to develop its business in geographically neighbors countries, with a close culture. The firm should develop its activity in the other countries in Scandinavia, that is to say Norway and Finland.

-Then, Handelsbanken will have to broad and deep its engagement in other countries. To achieve this goal, it has to modifies and adapts its products and/or services from country to country, with many products and brands unique to local settings.

-When the firm will have invested in the closest countries, it will have to implement subsidiaries around the world in order to enjoy a relatively high degree of autonomy so as to have a brand recognition all around the world.