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bANK z (A HYPOTHETICAL CASE)
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CASE STUDY: SERVICE INDUSTRY (Bank Z) General Background: Bank Z is the largest domestic private sector bank in India. Since its inception in 1930 till date, the bank takes a pride in serving its three million customers through a vast domestic network of seventeen regions consisting of 336 branches and 101 extension counters spread across the length and breadth of country. The total manpower strength of the bank stands at 5877, out of which 3780 are workmen. Financially, the bank has been doing moderately well with increasing trend of deposits and profits level. In the face of deregulation (Narasimham Committee Recommendations), stiff competition and volatility in markets, the bank had to opt for reorienting its strategic framework by introducing strategic intents like sustained profitable growth, training/upgradation of human skills, enhanced customers’, shareholders’ and employees’ satisfaction, leverage IT and branch network, focus on retail banking, establishment of strong customer relationships etc to retain the leading position among the private sector banks. These strategies were to be driven by measures such as diversification, joint ventures, customer service, cost reduction, restructuring etc. Assessment of Environment: The external environment of Bank Z is undergoing a rapid transformation. Among many of the external environment, the bank is facing the direct implications of following three key triggers: • Government Policy Changes: The implementation of liberalized policy by the government has created favorable environment for the banking sector. Such as deregulation of interest rate structure has given flexibility to the banks to fix its own rate of interest. Reduction of government stake to 33 percent has led to opportunity of having more power to the management team of the bank regarding the decision making etc. • Intensification of Competition: The impact of liberalized government reform is seen in the form of intensified competition in the banking sector. The entry of foreign banks and new private sector has increased the competition and complexity in the domestic banking sector. As a result, an extra effort needs to be made by every bank in order to achieve adequate level of growth and profitability in order to survive the rage of volatility due to stiff competition. • Technological Change: In order to move ahead in the competition, one of the strategic responses of Bank Z is leverage information technology and branch network. Introduction of more customized products such as Automatic Teller Machines (ATMs), Tele Banking Counters (TBCs) and Automating Forex services requires development of sophisticated technological packages. Thus, Bank Z needs to prepare well ahead to make necessary move to muddle through the IT jungle to meet the needs of the changing situation. Corporate Strategies Identification: Corporate Strategy means an overall managerial move/game plan for the whole organization. With the deregulation, the bank has realized the need to reorient its corporate strategy. It has started articulating a theme for every fiscal year to excel in its operations and gain maximum business advantage. As for instance we can see the bank working on the theme of “sustained profitable growth” or “diversified and balanced business portfolio” during two different fiscal years. The bank has responded by evolving three different forms of Strategic Responses lately to retain the leading position among the private sector banks.
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