"TD Bank Financial Group"
1 TD Bank Financial Group Written by: Manraj, Zach, Sukhdeep, Derek and Brendan Sunday, October 24, 2010 BOH4MT-A Scorcia, J 2 T ABLE OF CONTENTS 1. Title Page 2. Table of Contents 3. Executive Summary 4. 1. Introduction 5. 2. Current Business Information 5. 2.1 Current Business Strategy 5-7 3. Analysis of Issue – Advantages, Disadvantages and Results 7 4. Recommendations and Implementation 7 5. Conclusion 8 6. References 3 Executive Summary Through dominance in environmental adaptation and predictability, TD Bank Financial Group has truly shown perseverance in the acquisition of competitive advantage in the rapidly changing workplace environment. TD Bank Financial Group utilizes a resilient, unfaltering and adaptable business strategy, which continually illustrates that TD is built upon strong roots and a solid foundation. The form of departmentalization that TDBFG uses is a divisional structure, which is systematically organized by product or service. There are six principal environmental changes that continually challenge TD within the workplace atmosphere. The six changes comprise of intellectual capital, careers, diversity, technology and globalization. Capitalizing on these six, is the keystone in the foresight and anticipation of the rapidly changing workplace environment. TD‟s devotion to its economic, legal, ethical and social responsibilities is unparalleled among many corporations in its respective field. The integration of corporate social responsibility into its organizational goals has fostered a clean activist reputation among customers and communities. This is a testament to its flexibility, consistency and dependability in the fast paced changing workplace environment. Ultimately, TD‟s commitment to the six principal factors of organizational variation is a key factor in both its success and stability in regards to its future. With its proficiency of fulfilling five out of the six factors in environmental change, TD has shown its prominence in its respected field. TD Canada Trust has attained a resilient foothold in the changing nature of banking and investment management. 4 Background The Toronto-Dominion Bank (Commonly known as TD) was not always officially known as the Toronto-Dominion Bank. It was initially founded in 1855, as the Bank of Toronto. At that period of time, Canada was without the official currency, the dollar. As a result, banks were permitted to print personalized notes for their individual usage. Throughout this time, The Bank of Toronto showed prosperity and success in innovation and economic climate. However, this prosperity was interrupted by two World Wars, as many of the staff had to enlist to fight in the wars. After the wars ended, The Bank of Toronto merged with another significant bank at that time, The Dominion Bank. The result of the merger was the Toronto-Dominion Bank. The next big advancement was the introduction of the bank‟s first computer system in 1962. This was a breakthrough for banks because it drastically reduced the workload of the employees. Through its success, the official TD brand logo was instituted in 1969 and established the TD name as an easily identifiable brand. TD was also one of the first banks in Canada to create an ABM (The automated banking machine). Their creation, „The Green Machine‟, was introduced in 1976 and was a momentous breakthrough for banks. The routine jobs of deposits and withdrawals were taken care of by the machines. Therefore, higher-level services, such as investments and ventures, could be taken care of by a teller. Consequently, their adaptation in the field of technology was once again shown through the technological breakthrough of online banking. As the popularity of the Internet and electronic banking drastically grew, TD adapted by setting up a user-friendly website where clients could view their bank records, and even make transactions. In 1996, Waterhouse, a discount brokerage company, joined TD in hopes of increasing both organizations‟ success. Soon after, in 2000, TD merged with Canada Trust, with a shared philosophy of business: to emphasize customer service and product knowledge. The next step forward, and most recent acquisition, was the American powerhouse bank company, Commerce Bancorp, in 2007. Current Business Information From a current standpoint, The Toronto-Dominion bank is demonstrating both prosperity and wealth in an economic, social and ethical scope. It has continued to increase its profits by 7% each year despite the profound financial strife in the economy, which began in 2008. TD has shown more resilience and adaptability than many American banks, which have more or less lost money or have faded away due to bankruptcy. This increase in profits can be fundamentally traced back to its increasing share in the U.S market. Furthermore, it currently has $587 billion of assets within its holdings, over 2,000 branches across Canada and the U.S, and over 17 million customers. Its branches in Canada are dispersed all across the country; while in the U.S they operate only across the Northeast and Mid-Atlantic. This is set to change very soon following TDBFG's acquisition of The South Financial Group, which will result in The South Financial Groups banks in Florida and North and South Carolina becoming TD branches. As of 2009, more than 80% of their adjusted earnings are from retail banking (providing services directly to individuals and small businesses), whereas most American banks get the majority of their earning from investment banking (buying and selling financial securities). 5 Current Business Strategy TDBFG (The Toronto Dominion Bank Financial Group) embodies a mildly mechanistic organizational structure that shows its organic nature through an array of flexibility, such as alternative work schedules, personal goal setting and innovation and creativity among employees. The organization‟s mechanistic traits are shown through its definite banking rules and procedure, which is essential in maintaining clarity, sustainability and foresight within the business, TDBFG plans to continue expanding throughout the US beyond just the East Coast. This expansion will continue to drive and magnify its profits. The corporation's superior financial durability following the recession illustrates its competitive advantage over its competitors, which will have a definite impact in the support of its expansion. As TDBFG gains a larger US market share, it strives to preserve the following guiding principles. -The Enhancement of Our Brand -The Delivery of Legendary Customer Experiences -Being an Extraordinary Place to Work -Operating on a Daily Basis With Excellence -Understanding Our Business -Taking Only Calculated Risks We Understand and Can Manage -Increasing Shareholder Value The company feels it is important to have legendary customer service because such service would keep customers and bring in more - thus increasing long-term revenue. Remarkably, TD conducted 600,000 interviews with customers to gain feedback to improve their service. In addition, the corporation wishes to be an extraordinary place to work, which attracts and retains enterprising, intelligent, and diverse employees and develops them. This is critical to TD's success. Employee continuance involves a variety of activities, including having employees participate in employee engagement surveys, providing paid time off for volunteer activity, actively seeking and mentoring women and visible minorities, compensating employees for the cost of further education, and providing exceptionally flexible work hours to suit employees. Analysis of Issue – Advantages and Disadvantages Advantages Through a divisional structure, the TD Bank Financial group has been able to disperse different operations, such as retail banking, commercial banking, investment services and insurance. This has led to the development of different branches, such as TD Bank, TD Canada Trust, TD Waterhouse and TD Ameritrade. These separate product and process structures allow for better expertise focused on specific customers and banking operations. Also, this structure allows for increased flexibility in dealing with environmental changes, clear lines of responsibility and easier upsizing by adding divisions. 6 TD has understood the significance of their intellectual capital and diversity among both employees and customers in the new workplace. They have applied initiatives and frequent accolades to retain intelligent and highly skilled employees in their organization. TD Pulse is a company-wide internal survey conducted twice a year. Through this survey, TD collects the feedback of employees on topics of the organization and their work environment. TD has put forth a commitment to diversity in their organization. It has launched a program, which assists new Canadians to obtain positions in the bank. The continual effort of giving women opportunities in leadership positions has led to 34% of their vice-presidents being women. Furthermore, it is clearly evident that the nature of the workplace has changed. Careers in the new economy won‟t necessarily be uniformly full-time and limited to a single employer. Perceptive individuals recognize these changes, and TD actively tries to attract these intelligent individuals to help them grow and thrive within the organization. The exact activities that TD has done to do this are to provide mentorship programs for younger employees, and even pay for tuition fees for career advancement. It is evident that the world has become dependent and driven by technological development in the workplace. TD has taken advantage of this, in order to expand their customer base to reach a larger demographic. Instead of having customers come to a TD Bank or TD Canada Trust branch in order to do their banking, TD has created an online banking system. Through this, customers are able to access their bank account from their computer at home to check their balances and pay their bills. The utilization of technology has allowed TD to create a convenient banking experience for customers, while providing flexibility and ease of use for their customer base. Societal pressures and expectations for moral standards within organizations have drastically increased. Through the integration of corporate social responsibility into their organizational goals, TD has fostered a positive reputation and a clean image in the minds of their customers and communities. TD Bank is one of Canada‟s largest corporate contributors, providing millions of dollars to charities and non-profit organizations each year. They have also become the first bank, North American based, to be carbon neutral, which is a definite display of their concern for the physical environment. Disadvantages Though there are many advantages to TD Bank Financial Group‟s divisional structure, there are disadvantages as well. Even though there are different divisions for separate operations, there can be a duplication of resources and tasks. In addition, rivalries across different divisions can develop, which impacts issues such as communication and productivity. Correspondingly, the divisions may begin to focus solely on their divisional goals, and lose focus of overall corporate goals. Globalization is essential for an organization to succeed in today‟s rapidly changing workplace and unpredictable economy. This is an aspect, in which TD Bank Financial group has been at a disadvantage. This weakness in globalization has limited their business operations to North America. Other than a minimal amount of expansion into the United Kingdom, TD‟s market is mainly composed of Canada and the U.S. While competitors, such as HSBC and the Bank of America, have gained competitive advantage by doing their business operations on a global scale, TD has failed to expand outside of North America. 7 Results Through their current business strategy, TD has been recognized as one of the top 100 most sustainable companies in the world. In addition, TD has been honoured by Hewitt Associates, being named one of the “50 Best Employers in Canada” and by Maclean‟s magazine, as one of the “Top 100 Companies in Canada”. Their commitment to becoming an eco-friendly company has given them the honour of being named one of the “30 Greenest Organizations” in Canada. TD Bank Financial Group is also positioned in the top 1% of global corporate governance leadership, which shows the quality of their management. Economically, through the application of their current business strategy, TD Bank Financial Group generated $18 billion in revenues and $4 billion in net income in 2009. Recommendations and Implementations Due to the increasing globalization of the world, businesses must take advantage of international customers and resources to succeed. A strong international presence is a key facet of creating profits and staying competitive in the international market Banking organizations, such as HSBC, that have already expanded offices and branches internationally have shown success with superior clientele in various countries and continents. To begin to establish themselves as a worldwide brand, TD should consider expanding their banking branches into the United Kingdom. The economy in the United Kingdom is both stable and predictable, and has been flourishing the past two years. The UK expansion could serve not only as an additional generator of revenue, but also a means to continue expansion into Europe. Furthermore, the source of the majority of TD‟s revenue is retail banking, which is providing services, such as loans, credit cards and saving accounts, to individuals and small businesses. If they invest more into investment banking, which is using the money they have to trade financial securities, they could make much more money. Also, in order to correct its divisional structure issues, those who work for TD must understand their position in the organization. Smaller branches, such as TD Waterhouse and TD Insurance, must understand that they are providing their own individual service. However, they must recognize that they are representing the entire image of TDFBG. As long as each division or branch comprehends that they are working together to provide a service, there will be less confusion, less competition and more collaboration among the various sectors. An example of this would be limited funding for the marketing team. The solution could be that the two divisions could work together to attract a larger market. Conclusion TD‟s desire to adapt and transcend over environmental changes has truly set them apart from their competitors. This is uncompromisingly shown through: ethical and socially conscious views, strong connections with its customers, technological advances, diversity in the workplace, embracement of intellectual capital and the establishment of short–term and long-term opportunities. Throughout its history, TD has proven itself as a leader in the areas of financial and investment banking, by way of corporate social governance and sound business practices. If it continues its current path of success, with the implementation of globalization, TD can one day become a worldwide leader in finance and banking. 8 Bibliography and References "2009 Corporate Responsbility Report." 2009.http://www.td.com/corporateresponsibility/crr2009/index.jsp CBC News, "TD to buy South Financial in $191M deal." May 17, 2010.http://www.cbc.ca/money/story/2010/05/17/td-bank-south-financial-group.html "Investor Overview Presentation." September 2010.http://www.td.com/investor/2010/q32010_overview.pdf Richard Yerema and Kristina Leung, "TD bank one of the best places to work in Canada." Oct 15, 2010.http://www.eluta.ca/top-employer-td-bank "TD Bank Index." http://www.td.com/index.jsp