E-Banking and ABC costing Assignment Example | Topics and Well Written Essays - 4000 words

E-Banking and ABC costing - Assignment Example This article explores the implementation techniques of Activity-Based Costing (ABC) in the banking sector on the example of bank in order to analyze the cost structure for traditional and electronic channel transactions. The article shows how it is possible to implement ABC in banking and proves empirically that electronic channels help reduce the costs of both banks and their clients. The setup and infrastructure to implement e-banking services requires a huge amount of initial outlay. Therefore, European banks have spent billions of euros into building direct channels like the Web, upgrading branches and call centres, and trying to integrate all these channels. Major financial futurists predicted bright prospects to electronic banking. But after some years of excitement it appeared that the banks' long-awaited sky-rocketing profits from this area would not be yielded. Around the world, Internet banks are faltering. This situation requires a profound analysis to be able to understand the real cost of e-banking, and e-bank transactions in particular. All major banks have declared e-business as one of their core strategies for future developments. Until recently, most of the pricing decisions about e-bank services were made instinctively as the current financial management information systems did not support such analysis. This research expThis research explores the implementation techniques of Activity-Based Costing in the banking sector on the example of bank in order to analyze the cost structure for traditional and electronic channel transactions. Also conclusions are drawn about the profitability of e-banking transactions. The research addresses the following questions: 1. How can ABC techniques be implemented in a bank How it is possible to allocate IT expenses to products 2. What are the cost elements of e-channel transactions What are the major cost groups 3. Are e-channel transactions cheaper than those made via the traditional channels Chapter 2: Role of E-banking In the past, banks have used a set of integrated distribution channels has provided the basis for them to build strong relationships with their customers. Those banks leading to shape the way in which products are distributed can often gain long lasting competitive advantages. Like ATMs and 'phone banking, the Internet is seen by many banks today as a new, low cost distribution channel (Feng 2001). Unlike traditional corporate networks (which usually have private computer networks in place), the Internet has become a mass infrastructure available to an ever-growing segment of the population. It is based on an open, standard protocol for communications, and it is relatively inexpensive and non-proprietary with global accessibility. Most of all, the Internet is not only cheaper than other distribution channels but also allows banks to reach new customers in new areas more easily (Feng 2001). The advantages both for banks and their customers are obvious, especially in terms of cost and convenience. If we assume that the end users have the basic understanding of internet usage then substantial cost savings can be achieved if banks can persuade their

Case studies Essay Example | Topics and Well Written Essays - 1750 words

Case studies - Essay Example It started as small company but it grew so rapidly that, in 2004 it had been ranked 25th among the Top 50 S&P 500 companies by Business Week magazine. The company has set itself as an example for the other companies in the SME sectors across the world regarding how to become successful in a short span of time. The period of 1990s seemed to be most successful for the company when on average it had opened a new store almost in each working day. This high pace of growth continued even after its entry into the new millennium also. In fact it had been able to maintain thin momentum until recently. The ongoing global down turn had also affected the company badly like the others. Since 2008, it has closed around 900 stores in the United States as demand has declined sharply. However, it still has a growth plan outside the territory of USA in near future. In fact, it is planning to open as many as 900 new stores in the countries outside the USA. (Starbucks- company Overview, 2009) Very often, this company has faced several types of protests on the grounds of trade related policies, employee relations, impacts on environment, and so on. But in the mid of all these issues it has managed to grow at a very fast rate (Starbucks- company Overview, 2009). There are a number of factors that have helped Starbucks to become so successful. These factors are as follows- Rapid expansion on a global basis: Starbucks had adopted the method of expanding its market not only in the domestic front, but also in the foreign countries. This expansion plan has been able to make the name of the Starbucks known by a huge number of people around the world which simply has resulted in magnificent increase in the customer base of this company. By creating its presence in the global market on strong feet, it has been able to dominate the segment of market it caters to. It has been rated as one of the best company to work with and its pleasant working environment has made the company able to expand at such a high pace, while retaining its customer base at its other outlets. Creation of brand loyalty: One major reason behind its success is that it has been able to create huge brand loyalty among its customers. The company has always been careful in meeting the customers' need and providing them with memorable experiences so that they make a return to this brand again and again. This is why the company has been rates as one of those global brands that have created highest level of impact on their consumers. In 2003, a magazine had considered Starbucks as one of most trustworthy brand. Its recognition as one of the most impactful and most trustworthy brand has enhanced its brand value and has made its logo recognizable by the most. Consequently, it has helped to retain its customer-base. The degree of loyalty of the customers to the Starbucks brand is so huge that even when the customers go any foreign location, they visit Starbucks' outlet to have a cup of coffee that they enjoy in their own home town. Adoption of innovative strategies for business: the company has employed a highly skilled research team for developing innovative ways of attracting more and more customers to its brand, while retaining the existing customers' loyalty towards this brand. For example, in 2004, it introduced a CD burning service in one of its outlets in California. This innovative service allows its