Cost Accounting Analysis

Executive Summary

This report uses PESTEL and five forces framework to analyze the opportunities and threats in general and competitive environments respectively. The most important factors in the general environment are political and economic elements, while in a competitive environment, Westpac should pay more attention to the competitors and the availability of substitutes. Moreover, two categories of resources of Westpac are discussed, that is, financial and non-financial classes; and four aspects (physical, reputations, technological and human resources) are included.It is concluded that Westpac's capacity to make profits is lower other rivals although it has a considerable profitability. Based on the resources profile mentioned. The strengths are explored through value chain analysis which mainly focus on firm infrastructure, appropriate and diverse employee structure and better reputation. The weaknesses, such as higher risk of capital and lower profitability compared with Westpac's rivals, are detailed as well. Furthermore, according to all the discussion before, Westpac would consider five recommendations which are subdividing customer groups, expanding overseas operations, reducing expenditures, enhancing the liquidity risk management and transferring the investment orientation.

Question 1

Westpac, as one of the four largest banks in Australia, would be inevitably influenced by macro-environmental elements (Table 1.1) which will bring both opportunities and threats to Westpac. Financial policies are made to regulate the banking industry, especially the four pillars policy, which keeps the separation of the four major banks without preventing their competition. Although reforms (Australia Trade Commission2011) aim to contribute better banking industry, excessive regulatory intervention would limit Westpac's development. Under the stable increase of the Australian economy (McGrath 2013), Westpac would have more chances to enlarge its market in Asia....