1

W E LCO ME !

Group
4
 2

Aussie Home Loan

&
The Australian Home Loan Market
 Case Summary 3

“Aussie Home Loan was a Sydney based, 100% Australian owned, unlisted public company established in
February, 1992. Aussie had now in business for 5 years. By the time,

1
No. 5 home loan lender in Australia
with 8% of the market share.

2 Widely known by price based advertising

3 High probability of being No. 1.

6
The BIG FOUR banks began to compete more aggressively.

5
Direct and Indirect competition
 4

BIG ISSUE

How to proceed?
 5

The Macroenvironment
Political & Legal Forces

Election in 1982 and Banks were freed

1 2 from maximum
significant deregulation in
Banking industry. interest rate on home
loan.
Non banks were allowed 4
3
to offer Financial Services. 16 foreign banks
Macroenvironment entered.

Dollar was floated. 6 Availability of

5
quicker housing loan
at greater
convenience.
7
Building societies chose to
banks in 1990.
 Competitive Analysis 6

Threat of
New Entrants
1

HIGH
• High potential customers Competitive
• Low brand loyalty Rivalry
2
•
•
Low switching cost
Low Govt. regulation
FOUR
HIGH
STEPS

Bargaining Power of 3
Suppliers

LOW
• Consolidated Industry Structure
Bargaining Power of
• Price Maker
4 Customers
• Industry high demand

5 Threat of
Substitutes
HIGH
HIGH
 7

Alternative Strategies

Strategy 1 Strategy 2 Strategy 3

Interest Rate Liquidation Digital
Decrease Transformation
Team
 8

Dominant Strategy of AUSSIE

Assumptions:
CREATIVE

LEARN
01 No coordination among the competitors.:

IDEA

02 Having inter-dependencies among

the competitors.
 9

Dominant Strategy of AUSSIE

Up to July 1997, Aussie’s interest rate is 6.49%

Option 1 Option 2
Further reduce No change in
interest rate interest rate
 Aussie’s Dominant Strategy With Hypothetical Profit Amounts(Million)

Major Competitor’s
Strategy
Unchanged Reduce
interest rate Interest rate

Unchanged (800,800 (200,100

interest rate ) 0)
(1600) (1200)

Aussie’s Strategy
(1000,20 (400,400
Reduce 0) )
Interest rate
(1200) (800)

Aussie’s Dominant Strategy – Reduce Interest

Rate
 Increased interest rate by
Reserve Bank

Hold the same or can Should be

reduce because of followed by major
being broker competitors
 12

Competitive Advantage

No. one Broker Increased interest rate

at that time by Reserve Bank

Unnoticed by Major Cutting Price Linking

Competitors because with Major
of being small Insurance Company

Strong Competition
among the Major Banks
 13

Strategy Taken

Strategy 3
Digital
Transformation
Team
 Digital Transformation
Team

Platform space given to internal teams with better ways of interacting with
customers
 Modernizing the whole customer
experience
 Implementing the Adobe campaign
products
Upgrade Telephony technology

Make sure the business is leveraging those tech investments

Ensuring Broker with better experience by developing sales leaders to give end customers a
better experience
Improve Sales Force Wave Analytics Platform & Sales Force Technology
 Embracing different ways of working, reducing the number of meetings, increasing the level of
collaboration by creating different spaces than traditional office spaces
 15

T H A N K S