Reference no: EM133184838

Nedbank's history can be traced back to the early 19th century with the establishment of the Cape of Good Hope Bank in 1831. Following successive branding and structural changes, from The Nederlandsche Bank voor Zuid-Africa to the Netherlands Bank of South Africa, to the Nedcor Group in the 1980s, the Nedbank Group was formed in 2003. Nedbank regards 2004as a watershed year for the group as both structural and strategic changes were implemented to restore its performance and lay the foundation for sustainable growth into the future. In this year, Nedbank was faced with considerable challenges and a highly uncertain future. In the previous year, the Nedcor Group was formed, combining Nedcor, BoE, Nedcor Investment Bank and Cape of Good Hope Bank. In 2004, the bank was losing the market share, headline earnings were down 98 percent with a return on equity of only 0,4 percent. Nedbank was considered the lowest of the top banks in South Africa, who were all on an upwards trajectory compared to Nedbank's decline. Nedbank reputation was at an all-time low, during this time, Tom Boardman was appointed as CEO and was tasked with taking control of and rebuilding Nedbank. On the day of the announcement of his appointment, the bank's stock prices dropped by 6 percent. However, the new CEO had a plan which entailed a complete overhaul of the way the company did business. Boardman formulated the following goals: regain market share in key retail product areas and penetrate the mass market, retain leading positions in key wholesale market segments and grow the business banking franchise; reposition and stretch the Nedbank brand for broader market appeal; become a bank for all South Africans; and become the best place to work for in the financial services sector. The core business strategy of the bank informed a redefinition of its brand and the supporting marketing initiatives, anchored in the restated vision to become Southern Africa's most highly rated 4 and respected bank by our staff, clients, shareholders, regulators, and communities. However, in order to be successful, Tom Boardman and Nedbank understood that, in order to realise the vision, the bank needed to change and undergo a learning process. In addition, they also realised that this new vision needed to be supported by a strong strategy and a uniting set of values. Workshops were launched to implement strategies at lower levels of management. Control measures were then taken to ensure that Nedbank attained its "Journey back to the Top". The outcomes of the control measures taken by Nedbank, and the implementation of its turnaround strategy were remarkable. Since 2005, staff at Nedbank have worked together in a co-operative fashion. A measure of this is a decrease in the entropy score, which has fallen from 25 percent in 2005 to 13 percent in 2009 (entropy is a universal property of systems and refers to their tendency to run down and die). The bank realised their targets of 20 percent return on equity and 55 percent cost-toincome ratio. They also had the highest shareholder return of all the "Big Five" South African banks in 2009. However, Nedbank continues to face challenges. Market conditions within the financial industry are still marked by instability and ongoing uncertainty. In 2010, Nedbank had a change in leadership with the appointment of WT Brown as the new CEO, following the retirement of Tom Boardman. Under its new leadership, Nedbank is still anchored in the vision, values, objectives, and strategies as formulated by Tom Boardman and his management team, which are strongly supported by all employees of the bank. Despite the environmental challenges, Nedbank continues to thrive on the strong control measures that were taken during a time when the bank most needed it

1. Examine the steps Tom Boardman took to turn Nedbank around.

2. Expound the key areas of control in Nedbank.

3. Evaluate the characteristics of an effective control system.

4. Analyse how did the control process implemented by Tom Boardman provide feedback for the revision of planning.