Exercise: 1 – 7th Class of OSD

Macquarie Bank Case Study

Macquarie Bank is an excellent example of a highly successful organization, which has been able to maintain its success using an incremental adjustment process while operating in a rapidly changing environment. During the 1980s and 1990s, changes occurred in the environment of Australian financial institutions. These included rapid deregulation of the financial services sector by the Australian Labour Government. The critical moves involved were the floating of the Australian dollar, progressive removal of restrictions on competition between banks, building societies, merchant banks, and other institutions which offer financial services, and grant of new banking licenses including licenses to 16 foreign-owned banks to operate in Australia.

From its inception as ‘Hill Samuel Australia’ in the early 1970s, the bank’s strategic focus was merchant banking (investment banking). In 1980, the bank commenced a process of diversification. But, with deregulation in the 1980s it diversified further, building up strength in specialist markets, particularly in high value-added niches (market segments) like corporate services, bullion and commodities. The pace of diversification quickened by the mid 1980s with the bank entering into a range of new areas including retail domestic banking, equity investments, property and leasing.

Growth took place by way of both development and acquisition. Macquarie remains one of Australia’s most successful and profitable banks. So, how did Macquarie executives manage the needed organizational change?

Change in Macquarie has been a process of constant adjustment. One executive described it this way: ‘We never stay still, but we don’t change in quantum leaps—our corporate culture would preclude that. Running a business on partnership concepts means that policy decisions are