Private Sector and Business Term Paper

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History of UBS Organization

UBS is a publicly company incorporated in Switzerland that operates in the global banking and financial services sector. While the organization's principal offices were initially in Zurich, it is currently co-headquartered in Zurich and Basel. This public company was initially founded as Union Bank of Switzerland in 1856 i.e. more than 150 years ago. Following the company's merger with Swiss Bank Corporation in 1998, UBS stopped being a figurative abbreviation of the company. In essence, UBS is no longer considered as the firm's representational abbreviation but as a stand-alone name for this organization. Since its inception, the company has experienced tremendous growth and profitability across all its operations largely because of strategic business policies and practices including mergers and acquisitions like the 1998 merger with Swiss Bank Corporation.

The profitability and success of this company has also been supported by its increased expansion to new regions across the globe. The organization's expansion and establishment of operations in several countries worldwide have been influenced by the increase in demand for private banking services from time to time. Currently, UBS has offices in over 50 countries worldwide and employs approximately 60,000 workers most of whom are based in the Americas followed by Switzerland and Europe. The huge employee base and operations in more than 50 countries have contributed to the organization's leading position in the global banking and financial services industry.

As one of the leading players in this industry, the organization provides a wide range of banking and financial services to its international business clients. Some of the financial services provided by UBS to its huge customer base include investment banking services, asset management, and wealth management. The investment banking services incorporate personal and corporate banking services that are provided to individuals and corporate clients (private, corporate, and institutional clients) respectively. Asset management services include investment styles and capabilities services whereas wealth management include detailed advice and financial services to wealthy customers throughout the globe.

UBS has a strong competitive position in its target markets worldwide because of its excellent performance in providing its customers with sound financial advice and solutions. This strong strategic position is also supported by the organization's capabilities to create attractive and sustainable value to its customers and shareholders. The key drivers of the organizations strategic position are strong wealth management practices, capital efficiency, and a strong profitability and growth outlook. These factors have not only contributed to the strong competitive position but also enhanced the growth prospects of the organization across all its operations and target markets.

At the end of 2016 financial year, UBS net income was $832 million dollars or 827 million Swiss francs, which was below the expected 945 million Swiss francs. However, the company still maintained a strong position in the market despite the decline in profitability. In the past few years, UBS has experienced problems relating to wealth management, which has been considered as the major contributing factor to its decline in profitability. While the firm has largely focused its operations on the business of wealth management, the recent woes have contributed to declined profitability. The wealth management issues have affected the firm's sustainability efforts and demonstrated the need for the organization to work with its clients in order to grow and safeguard their wealth across generations. UBS has also faced challenges relating to the need to create value for its international business clients through offering solutions in a manner that empowers them to respond to increased demands for private sector investment.

Part II -- Critical Analysis of UBS's Current Issues

As shown in the previous section, UBS has experienced tremendous challenges relating to wealth management. According to Letzing (2016), the company's recent decline in profitability is attributable to the wealth management problems it continues to experience. While the company reduced its volatile investment bank services in favor of the apparent more consistent wealth management business, recent wealth management woes have made it difficult for UBS to attain desired and expected profitability.

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For instance, at the end of 2016, the organization experienced a 60% decline year-on-year in profits to generate a net income of 827 million Swiss francs rather than the anticipated 945 million Swiss francs (Action, 2016). This decline was largely attributable to the organization's wealth management practices and a slowdown in client activity in this area.

The current problems of wealth management by UBS have been compounded by turmoil in financial markets and the stark growth of capital in emerging markets. These problems have come at a time where are increased calls for enhanced private sector investment in the United Nations Sustainable Development Goals. Member States of the United Nations recently agreed that there is need to mobilize resources from various sources towards private investment for the achievement of sustainable development goals (Alba et al., 2015). These agreements were reached on the premise that the private sector has a vital role in the success and realization of sustainable development goals.

For the international investment community and UBS, these call for private sector investment in SDGs has generated the need to create value to international business clients. The international investment community faces the challenge of allocating capital to socially and environmentally-themed investment opportunities. In this regard, the global investment community needs to balance between investments in profitable ventures and investment in ventures that generate environmental and social benefits. This is a major challenge given that the community has capacity limitations and need to ensure that all their investments are profitable (Alba et al., 2015). In an increasingly competitive business environment, the international investment community faces difficulties in achieving this balance.

Additionally, the international investment community faces the challenges of insufficient risk-return profiles, inadequate investee company transparency, and lack of relevant data (United Nations, 2016). The global investment community has also faced the challenge of lack of adequate information on how SDGs are relevant to investors. These challenges have made it difficult for this community to promote private sector investment towards the SDGs through creating barriers to individual investors and investment companies or institutions.

For UBS, the main challenge emerging from these calls is the need to provide solutions that create value for its international business clients. Through improved value creation, UBS helps international business clients to engage in private sector investment towards the realization of the sustainable development goals established by the United Nations. These calls have created demands for banking and financial services companies like UBS to increase access to finance and provide a wide range of financial services to their customers. Given the turbulence in financial markets and other industry-related issues, increasing access to finance to international business clients is a major problem for UBS. The organization also experiences problems in providing solutions that create value to international business clients in relation to private sector investment towards SDGs because of increased regulatory pressures. Regulatory pressures have hindered the organization's ability to provide suitable solutions that would in turn enhance the capabilities of its international business clients to improve investment in SDGs. When the organization's international business clients are unable to have access to finance and other finance-related services, they are unable to respond to calls for private sector investment in United Nation's Sustainable Development Goals.

Conceptual/Theoretical Framework for Understanding UBS's Challenges

UBS's challenges in relation to private sector investment in SDGs can be understood through the use of relevant theories in the analysis. One of the concepts applicable concepts to UBS's current problems is the Creating Shared Value, which proposes that business organizations can create share value through generating financial value in a manner that also generates societal benefits (Porter & Kramer, 2011). Companies have experienced challenges in creating shared value because they are trapped in the old-fashioned approach to value creation,….....

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