Royal Bank of Scotland’s Organizational Problem Analysis

Introduction

In essence, businesses remain constantly evolving, and with evolution, organizations should adapt to realize numerous challenges. Research offers that nearly 50% of organizational initiatives for amendments often do not succeed (Shrivastava et al., 2022). Problems with knowledge about planning, understanding the change process, and coordination, including executing transformation, contribute to gaps that adds to the organization’s failure. Management of amendments reflects the process of successfully guiding organizational adjustments (Shrivastava et al., 2022). It follows specific steps that recommend the managerial process transformation from starting conditions to a functional endpoint. This paper will explore the change management plan based on the Royal Bank of Scotland’s acquisition of NatWest. It will serve a purpose in gaining insights into the process of transformation. This includes integrating data from diverse topics relating to the management of change in business during the process of formulating diagnostic reports on different work situations.

Elements of Attention and Discussion from the Case

Numerous elements can be drawn from the acquisition of the NatWest Bank, which facilitates the comprehension of management integration of previously separate businesses. The RBS launched an effective integration plan following the 2000 NatWest acquisition. The approach was intended to yield revenue gains and enhance savings that the acquisition company had promised the capital markets in the takeover bid (Brown & Peterson, 2022). The semi-structured approach identified was targeted at managing significant changes and offers a theoretical perspective in analyzing subsequent events. The preceding narratives had vital implications for the management of substantial acquisitions. It is worth noting that the unusual addition observed through the case of Royal Bank of Scotland acquiring NatWest resulted in numerous consequences, including profound employment security effects. The elements that necessitate attention following the acquisition process include the implication of the merger and strategies pursued by the banks, including trade unions’ responses.

The concept of semi-structures is offered in successful business integration to relate the learned lessons to a broader theoretical literature. Drawing from theoretical perspectives, the paper will explore how the RBS/NatWest applied a semi-structured approach to enhance acquisition success. Also, the article will explore how the theoretical perspective promoted outcomes, including implications for managing other substantive acquisitions. An example of a theoretical perspective of change to understand how change management was applied in the case (Brown & Peterson, 2022). From this point, an analytical framework was incorporated to analyze the situation. Based on the analytical framework, acquisitions elicits value that enhances and promotes strategies with capacities of the merged firms, enhancing their competitive positions. Based on the framework, the process becomes successful following complete acquisition with the transfer of capabilities by stakeholders and the organization to generate new benefits.

The model incorporated the RBS acquisition of NatWest and promised the shareholders that the process would yield more income gains and cost savings. During the first year, RBS modified reports to hasten the decision-making process (Thisarani & Fernando, 2021). The process gave a false impression that the merger had worked well. From my perspective, the reporting process could have allowed the managers’ time to enhance the accuracy of the information for processing. The aspects that could have been done differently include negotiating terms and ensuring process alignment to foster effective change to allow the merger to realize a common goal (Densen, 2020). A careful approach would allow the RBS system to incorporate critical milestones to enhance data transfers to minimize errors that would implicate the overall sustainability of the business.

Methods to Investigate the Situation

Research offers that an appropriate valuation method remains critical in establishing the value of the acquisition process. Numerous ways can be incorporated for strategic considerations of business success. Concerning the current case, the methods applied for further investigation include earning-based, market-based, and asset-based approaches. Earning-based practices reflect techniques used to generate reasonable profits within the business (Long Nguyen & Megargel, 2022). The structured methods concerning the identified case supported outcomes in numerous ways. Research by Hanafizadeh & Marjaie (2021) offers that the RBS/NatWest acquisition was a success. The study’s valuation of the company’s value depicts that technology integration employed by the team remitted successful integration of technologies to maximize efficiencies (Hanafizadeh & Marjaie, 2021). The integration of technologies resulted in benefits such as the cost savings being realized, and a single network of computed processes was employed, which supported connections yielding other significant benefits.

To complete the integration of the RBS/NatWest acquisition, research offers that a high plan was incorporated to facilitate the complete transfer of pertinent information about the NatWest to the enlarged RBS system. The data transfer process was evaluated and tested for months to enhance the timely success of activities. The implication of research in the post-acquisition process, the RBS/NatWest acquisition exceeded the benefits of 1.1 billion Euros of repeatable cost savings (Shenglin et al., 2018). The approach reflects success in the program as predicted initially before the acquisition. It is worth noting that the managers were aware of the process, which enhanced the success of the intervention. Evidence suggests that using a semi-structured approach allowed managers to achieve the desired goal (Hanafizadeh & Marjaie, 2021). For instance, management of other post-integration managerial strategies was effective given that the managers worked together to realize the program’s goals.

Organizational Processes in the Scenario

Combining RBS with NatWest provides a unique perspective of new forces in banking. The scenario directs towards innovations, the growth philosophy of companies, and restructuring businesses within organizational scales to achieve substantive cost savings and revenue opportunities. The enlarged groups developed yield opportunities that benefit different individuals within an industry, including employees, customers, and shareholders of the larger group (Long Nguyen & Megargel, 2022). Other organizational processes that may play a role in the situation include capturing the benefits of consolidation transformations, including merging operations (Dinesen, 2020). Combining revenue benefits and cost savings plays a critical role in generating substantive value for shareholders. Overall, merging and acquiring companies offers a unique opportunity for creating a broad range of products to improve the overall performance and productivity within the company.

Noteworthy, numerous researches fail to deliver the desired benefits for shareholders. Other than the benefits realized with the RBS acquisition of NatWest, the problems investigated reflect the imposition of the RBS/ NatWest integration (Dinesen, 2020). According to research, the initiatives that would help the organization included eliminating duplicated administrative, harmonizing operations, and mobbing NatWest data to the acquiring company’s system. The primary shortcoming of the merger entails the numerous unemployment rates that preceded the hostile takeover (Okpebholo & Sheikh, 2020). In addition to the unemployment rates, asset-based methods reveal that RBS was challenged for its financial means following the acquisition, which contributed to the near-collapse of the integration years following its acquisition. Given the addition, limitations within the case involve the inability of the business to secure close relationships from the center.

Regarding RBS system technology, NatWest admitted that the exact amount of money in shareholders’ accounts following the crisis resulted in failed software updates. Initially, the company was successful in its approach through the acquisition and integration process. The downfall commenced following failures in the system that regulated the batch system dealing with transactions (Hanafizadeh & Marjaie, 2022). The batch processing system reconciles with the movement of finances within the organization. Nevertheless, the presenting problem necessitates interventions to enhance its sustainability in the competitive market niche.

How to Address the Processes and Problems: Interventions

The challenges following the acquisition of the NatWest bank by the Royal Bank of Scotland was that the acquired company continually lost its competitive grounds. Additionally, the process led to a drastic increase in the cost-income ratio. Research offers that the acquisition deal was worth £ 21 billion (Bogle, 2018). The agreement reflects a significant transaction and acquisition in the UK banking history. Another concern concerning the scenario entails the failure of the asset to demonstrate the desired benefits to its shareholders. For instance, following the acquisition of NatWest, employees and other shareholders lost employment opportunities (Dinesen, 2019). The process destroys shareholder values, given the bulk of the market value following the acquisition. Notably, in 2012, the primary concerns faced by the integration included problems with a software upgrade. The fears caused significant stress, including disruption.

Given the problems drawn from the acquisition and integration of companies, there are numerous perspectives to address the concern. Following the system failures, the RBS Company put specific strategies to revive the company. For instance, the RBS assigned about 125 million euros to serve as compensation, including costs following disruptions (Okpebholo & Sheikh, 2020). According to the FCA of the integration, the concern affected over 6.5 million individuals and customers (Stone et al., 2020). The failures stemmed from the inability of the system to design alternative methods, to minimize disruption. Another intervention to address issues arising from the population includes ensuring the organization has a significant scale, including the capacity to create diverse opportunities that benefit the company. In light of the evidence, a better ranking of integration allows for the incorporation of numerous opportunities within the business to generate additional value (Bogle, 2018). Moreover, developing a different alliance in the industry remains essential in strengthening a strategic partnership that attracts significant market capitalization. Overall, strategies to address the concerns should be incorporated and improved to enhance the company’s sustainability.

Evaluating the Effects on Employees

I would plan to evaluate employees by assessing the number of employees that fail to secure a job following the uncertainties of acquisition. It is worth noting that investments and integration of companies result in heightened stress levels, including other signs of risks targeting the employees within the company. Given that acquisitions tend to result in calling off employees in redundant organizational regions, evaluating the impact of the concern on employees remains vital (Brown & Peterson, 2022). Employee evaluation remains particular as the company’s staff must obtain insights regarding the new corporate culture, including the operating system and management structure. The assessment will focus on assessing the communication following the integration. Given this, poor communication transition between the company may affect the employees and raise dissatisfaction levels. Planning for evaluating impacts on the employees remains vital to ensure correct measures can be incorporated to enhance the organization’s success.

In addressing the different concerns relating to acquisitions and integration, the company’s consultant plays a significant role in various aspects (Brown & Peterson, 2022). For instance, the consultant works directly with the human resource to assess different concerns relating to the process and ensure tools for change management exist within the business. The consultant plans for various activities that evaluate the scope, new market access, and management roles throughout the process. All the interventions are vital in enhancing the program’s success (Brown & Peterson, 2022). Through other administrative within the business, the consultant engages in the performance of due diligence, which helps recognize the potential acquisition targets and the potential outcomes of the intervention. Overall, the consultant explores critical aspects in planning and establishing innovations vital in enhancing continuous improvements following the integration process.

Conclusion

While businesses remain constantly evolving, and with evolution, organizations should adapt to realize numerous challenges, most of the changes do not succeed. Problems with knowledge about planning, understanding the change process, and coordination, including executing change, contribute to gaps adding to the organization’s failure. Change management reflects the process of guiding changes within the organization to fruition. The RBS/NatWest acquisition was a success, though some loss elements, such as system upgrade failure, are observed with the system. Following the system failures, the RBS Company put specific strategies to revive the company. For instance, the RBS assigned about 125 million euros to serve as compensation, including costs following disruptions. Overall, the company’s consultants have a pivotal role in ensuring successful acquisitions.

References

Bogle, J. C. (2018). The modern corporation and the public interest. Financial Analysts Journal, 74(3), 8-17.

Brown, G., & Peterson, R. S. (2022). The Conforming Board: Royal Bank of Scotland. In Disaster in the Boardroom, 145-157. Palgrave Macmillan, Cham.

Dinesen, C. (2020). Bank Failures Cause a Global Crisis: How the Complexities of United States Mortgage Securities Devastated Banks and Made the Banking Crises Global. In Absent Management in Banking, 201-225. Palgrave Macmillan, Cham.

Hanafizadeh, P., & Marjaie, S. (2021). Exploring banking business model types: A cognitive view. Digital Business, 1(2), 100012.

Long Nguyen, H. H., & Megargel, A. (2022). Strategic business models under open banking: A guideline for incumbent banks. Journal of Digital Banking, 6(4), 366-380.

Okpebholo, E., & Sheikh, A. Z. (2020). Optimization of non-monetary reward provisions: Evidence from the UK banking sector. IBA Business Review, 15(1).

Shenglin, B., Yu, J., Gu, Y., Lv, J., Zhang, L., Gong, H., & Shuai, Q. (2018). Implications of Risks Associated with Banks’ Internationalization. In Pursuit of Presence or Prominence? 111-137. Springer, Singapore.

Shrivastava, S., Pazzaglia, F., Sonpar, K., & McLoughlin, D. (2022). Effective communication during organizational change: a cross-cultural perspective. Cross-Cultural & Strategic Management, ahead-of-print.

Stone, R. J., Cox, A., & Gavin, M. (2020). Human resource management. John Wiley & Sons.

Thisarani, M., & Fernando, S. (2021,). Artificial Intelligence for Futuristic Banking. In 2021 IEEE International Conference on Engineering, Technology, and Innovation (ICE/ITMC), 1-13. IEEE.