Commerce Bank Harvard Case Solution & Analysis

Competitive Quantitative Analysis

Appendix 2 shows a comparison of Commerce’s ROA and ROI with the commercial banking industry trends. It can be seen that Commerce’s performance in terms of Return on Equity has been better than the overall trend in the industry. In the last one year from 2000 to 2001, industry trends have shown a fall in ROE from 13% to 12% while Commerce has still managed to maintain an ROE of 15% for both these years respectively.

As far as the return on assets (ROA) is concerned, Industry trends show that Commerce needs to improve its efficiency levels in terms of utilization of total assets since Commerce’s performance is lower than the overall industry’s performance.

Evaluation of Alternatives

Three alternatives have been suggested below for Commerce while taking its retailtainment’s strategy forward.

No Retailtainment Model: Another Me-Too Bank

As per the ‘No Retailtainment Model’, Commerce will not indulge in any ‘retailtainment’ efforts and will project itself as a ‘Me-Too bank’. As far as differentiation through other means is concerned, measures such as extra working hours and serving customers on Sundays should continue while ‘Retailtainment’ in the form of jugglers, hot dog vendors and greeters would be eliminated from the business model.

The advantage of this strategy is that customers who are strictly looking for services at the bank and do not want to be entertained while banking would be pleased with the environment. In addition to this, Commerce would be able to save up on overheads incurred on provision of ‘retailtainment’ for all its branches.

The drawback of a ‘Me-Too’ strategy is that Commerce would not be able to differentiate its services from the others in the industry where commercial banks are offering homogenous products and service; differentiation is the only way of creating a difference. Commerce would have a low bargaining power in the industry if it remains a ‘me-too’ player and would not be able to enjoy a privileged position especially if it offers lower rates on deposits as well.

Retailtainment & Creativity: Empowerment for brand managers

As per the ‘retailtainment & creativity’ option, branch managers would be empowered in terms of indulging in creativity and branches would follow a de-centralized model. The fact that ‘retailtainment’ is basically adopted to encourage branch managers to be creative suggests that this model would be the most suitable one if Commerce actually wants to opt for differentiation through ‘retailtainment’. However, there are drawbacks to following a de-centralized model for ‘retailtainment’. Firstly, it should be noted that Commerce has been adopting a model of uniformity in terms of maintaining standardization in branch interiors. One of the strengths of Commerce has been the convenience it offers to customers in every way and the uniformity adopted in each branch’s interior decoration has been an extension of this philosophy. By allowing branches to follow ‘retailtainment’ via de-centralization, Commerce would no longer be following its philosophy of standardization.Commerce Bank Case Analysis Case Solution

Retailtainment & Standardization: Limiting the use of creativity

As per the third option, ‘retailtainment’ would follow uniformity so that each branch adopts the same type of creativity.  While restricting ‘retailtainment’ might not allow the branch managers to express their creativity, which may be beneficial in other ways. For instance, the bank would be able to embrace the philosophy of controlling the environment of each branch. In addition to this, centralization would be maintained so that branches would not be able to indulge in creative endeavors that deviate from the acceptable norms of ‘retailtainment’ for commercial banks.........................................

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