Term Paper

On

Service Marketing

Submitted to:

Submitted by:

Name ID Signature

Md Yeahyea Kabir 2012-1-95-065

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S.S.M Sadrul HudaFaculty of Business AdministrationMBA ProgramEast West University

Letter of Transmittal

S.S.M Sadrul Huda

Faculty Member

Master of Business Administration Department

East West University

Subject: Submission of Term paper.

Dear Sir,

It is our pleasure to submit the report on “Ethical Misconduct in Dutch Bangla Bank” as a

part of our term paper. We have enjoyed preparing this term paper which enriched our

practical knowledge of the theoretical concept. We tried to reflect the practical operational

aspects of the organization which is complementary to the theoretical lessons.

Sincerely yours,

__________________

Md Yeahyea Kabir

On behalf of the group

Table of Content

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SL Topic Page

1 Introduction 4

2 Dutch Bangla Bank Profile 5

3 Ethics in Service 8

4 Ethics & banking Sector 8

5 The Opportunity for Ethical Misconduct in

Service Marketing

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6 Issues that Create Ethical Conflict 11

7 Controlling Ethical Decision Making 12

8 Conclusion 14

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Introduction

Ethical misconduct disasters constitute serious costly risks to the continuity and survival of a

business. Regular headlines reveal that breakdowns of integrity collectively cost businesses

billions of dollars in litigation, fraudulent financial acts, increased costs, fines, reputation

and image damage, customer/client trust, lost sales and recovery costs, and potentially land

senior management in prison. No company is immune from these threats. Prudent

businesses must plan to manage integrity continuity by assessing their vulnerability to

ethical disasters, taking proactive measures, and preparing their organizations to mitigate

and survive when such scandals break. In service sector it’s a common scenario.

Bank is the important financial institution in the economy. The economic development of a

country depends on the development of banking sector. Today’s modern banks are not

only providing traditional banking services but also expanding many financial services.

Foreign Exchange Division occupies an important place in a nation’s economy because of

its intermediary role; it ensures allocation of resources and keeps up the momentum of

economic activities. A banking institution is indispensable in a modern society. It plays a

pivotal role in the economic development of a country and forms the core at the money

market in any country. In a developing country like Bangladesh the banking system as a

whole has a vital role to play in the progress of economic development.

This term paper emphasizes on the ethical misconducts opportunity, Issues, & controlling

the ethical decision making. It’s our pleasure to submit our Term paper Titled “Ethical

Misconduct in Dutch Bangla Bank” While preparing this term paper, we have tried to gather

as much information as possible and to gather all the information pertaining the subject to

enrich it. We believe that it was a fascination experience to analysis the service sector and it

has enriched both our knowledge & experience.

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Dutch Bangla Bank Profile

Dutch-Bangla Bank started operation is Bangladesh’s first joint venture bank. The bank

was an effort by local shareholders spearheaded by Md. Sahabuddin Ahmed (Founder

chairman) and the Dutch company FMO.

It is the largest bank in Bangladesh by market capital. DBBL was established under the

Bank Companies Act 1991 and incorporated as a public limited company under the

Companies Act 1994 in Bangladesh with the primary objective to carry on all kinds of

banking business in Bangladesh. DBBL commenced formal operation from June 3, 1996.

The Bank is listed with the Dhaka Stock Exchange Limited and Chittagong Stock Exchange

Limited.

From the onset, the focus of the bank has been financing high-growth manufacturing

industries in Bangladesh. The rationale being that the manufacturing sector exports

Bangladeshi products worldwide. Thereby financing and concentrating on this sector

allows Bangladesh to achieve the desired growth. DBBL’s other focus is Corporate Social

Responsibility (CSR). Even though CSR is now a clichés, DBBL is the pioneer in this sector

and termed the contribution simply as ‘social responsibility’. Due to its investment in this

sector, DBBL has become one of the largest donors and the largest bank donor in

Bangladesh. The bank has won numerous international awards because of its unique

approach as a socially conscious bank.

DBBL was the first bank in Bangladesh to be fully automated. The Electronic- Banking

Division was established in 2002 to undertake rapid automation and bring modern

banking services into this field. Full automation was completed in 2003 and hereby

introduced plastic money to the Bangladeshi masses. DBBL also operates the nation’s

largest ATM fleet and in the process drastically cut consumer costs and fees by 80%.

Moreover, DBBL choosing the low profitability route for this sector has surprised many

critics. DBBL had pursued the mass automation in Banking as a CSR activity and never

intended profitability from this sector. As a result it now provides unrivaled banking

technology offerings to all its customers. Because of this mindset, most local banks have

joined DBBL’s banking infrastructure instead of pursuing their own.

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Vision of Dutch-Bangla Bank:

“To become a leading banking institution and play a pivotal role in the development of

the country”

DUTCH BANGLA BANK dreams of better Bangladesh, where arts and letters, sports and

athletics, music and entertainment, science and education, health and hygiene, clean and

pollution free environment and above all a society based on morality and ethics make all

our lives worth living. DBBL’s essence and ethos rest on a cosmos of creativity and the

marvel magic of a charm life that abounds with sprit of life and adventures that

contributes towards human development.

Mission of Dutch-Bangla Bank:

Dutch Bangla Bank engineers enterprise and creativity in business and industry with a

commitment to social responsibility.” PROFIT ALONE” does not hold a central focus in

the bank’s operation; because “man does not live by brain and butter alone “.

Core Objective of DBBL:

Dutch-Bangla Bank believes in its uncompromising commitment to fulfill its customer

needs and satisfaction and to become their first choice in banking. Taking cue from its

pool esteemed clientele, Dutch-Bangla Bank intends to pave the way for a new era in

banking that uphold and epitomize its vaunted Marques “Your Trusted Partner”

To earn and maintain CAMEL Rating ‘Strong’

To establish relationship banking and improve service quality through development of

Strategic Marketing Plans.

To remain one of the best banks in Bangladesh in terms of profitability and assets quality.

To introduce fully automated systems through integration of information technology.

To ensure an adequate rate of return on investment

To keep risk position at an acceptable range (including any off balance sheet risk)

The Board:

The board is comprised of directors having diverse skills, experience and expertise to add

value towards better corporate governance of the bank and maximizing value for all

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stakeholders. The board discharges its responsibilities itself or through various

committees. The Board meets on a regular basis to discharge its responsibilities.

The Board is made up of 10 (ten) Directors including a Chairman and five Directors

representing shareholders, one independent Director, two Directors from depositors and

the Managing Director.

Principal Activities:

The principle activity of the bank is banking. The banking business includes obtain

deposits through account opening, offer credit to corporate organizations, as well as

retail and small & medium enterprise, trade financing, project financing, lease and hire

purchase financing. The modes of banking include conventional banking. It also performs

merchant banking function under the license by Securities and Exchange Commission,

Dhaka, Bangladesh.

Customer Service:

DBBL has wide span of customer service. As DBBL has huge number of customer. So does

they are maintaining a good customer service countrywide.

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Ethics in Service:

Ethics is a branch of philosophy dealing with what is good and bad and with moral duty

and obligations, the principles of moral conduct governing an individual or group. The

basic concepts and fundamental principles of decent human conduct. It includes study of

universal values such as the essential equality of all men and women, human or natural

rights, obedience to the law of land, concern for health and safety and, increasingly, also

for the natural environment.

Code of ethics is simple. The individuals shall honor their responsibility to the public by

promoting public understanding of the professions, by supporting the development of

services designed to fulfill the unmet needs of the public, and by providing accurate

information in all communications involving any aspect of the professions, including the

dissemination of research findings and scholarly activities, and the promotion, marketing,

and advertising of products and services.

Ethics & Banking Sector:

In today’s competitive scenario, every bank wants to become the market leader, capture

maximum market share and have maximum customer base. To achieve this objective

various kind of marketing strategies and communications are undertaken. The

communications are extremely important in case of services to create powerful images

and a sense of credibility, confidence and assurance for the consumers. However, in the

banking sector, marketing communication elements are misunderstood and irrelevant

from the consumer’s perspective. Moreover, for the growth and survival every business

has to tradeoff between ‘profit’ and ‘ethical’ issues concerning their marketing

strategies. In general, ethics are defined as “a branch of philosophy dealing with what is

good and bad and with moral duty and obligation”. Opportunities for ethical misconduct

with in service sector abound and they can be attributed pre dominantly to the

intangibility, heterogeneity and inseparability dimensions inherent in the provision of

services.

Inseparability complicates the consumer’s ability to evaluate the quality of service

provided

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Heterogeneity reflects the difficulty in standardization and quality control

Inseparability reflects the human elements involved in the services delivery

process.

All three dimensions contribute to consumer vulnerability to and reliance upon the

services provider’s ethical conduct during the service encounter.

The Opportunity for Ethical Misconduct in Service Marketing:

Services are intangible. It cannot be seen. Services are being provided by human beings,

deliverance of service is different from person to person hence it cannot be standardized.

Due to all these factors there are lot many chances where the ethical misconduct can be

seen/encountered.

Few Search Attribute:

Due to intangibility of the services, consumers can not physically examine the services

before purchasing; consequently, consumers have little pre-purchase information about

the services. Here customer have little information before available to help them make

an informed, intelligent decision. Consumer of service often must base their purchase

decisions on information provided by the service provider.

As an example customer don’t know that how well the ATM can give service to the

customer.

Technical and specialized services:

Banking service is technical in nature. It is not easily understood and or evaluated. A

customer can’t know that how the banking service is running. This evaluation is taken

based on the appearance of the bank. How they are informing socially.

As an example, DBBL is socially sound bank. They are donating huge money socially. This

creates a brand image so that customers are attracted.

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Time Lapse between performance and Evaluation:

Services like bank are mostly done for future. For example the success and failure of

retirement planning may not be realized before retirement. Here banks are getting the

benefit. They are giving service for a distant future. Such as DPS, this is a program designed

for future. Customers cannot determine the failure or service in the future.

Service Sold without guaranties and warranties:

Services are sold without guarantee and warranty. DBBL account is opened by the

unskilled employees. Thus any problem can occur during the production process. Credit

card is another example for the service sold without guaranties and warranties, because

for any problem customer might have to do that again. It will take time.

Service Performed by boundary Spanning Personnel:

Many time’s services are provided outside the physical premises of the bank. For example

most of the Credit Card application form is filled up in the residence/ office of the

customers, as a service gesture bank official visit the customer at their place. Due to this

service provider often are not under the direct supervision. Physical distance is also come

to the effect.

Accepted Variability in Performance:

Due to heterogeneity, standardization and quality control measures cannot be

implemented in service deliverance. Each individual is different in their transaction. It is

unavoidable in nature. In DBBL different bank teller employee can perform differently.

Some are superfast and some are slow.

Outcome Based Reward System:

Reward system in an opportunity for ethical misconduct. DBBL banks commission for bank

opening is a reason. Thus employees are focused only for earning money rather that giving

standardized service. Thus they earns more but fails to provide standard service.

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Customer Participation in Production:

People think that with involvement of the customer in the Bank service encounter, there

will be fewer opportunities for ethical misconduct. But the things are vice versa, the

Consumer’s involvement in the whole process enables a service provider to influence the

consumer through fear or greed for the product.

As an example during opening for a Bank account customer service employees focuses to

take more deposit from customer. Thus they earn more. They make an impression to the

customer that this is the best policy for you.

Issues that Create Ethical Conflict:

In banking institutions personal selling is highly used and reliable media of

Communication. DBBL is not the exception. Each and every day peoples are

communicating with the bank personnel. Due to individuality of service provider and

consumer, the chances of ethical misconduct increases due to greed, self-interest, profit

maximization, to accomplish targets etc.

Conflict of Interest:

In this scenario Service provider can be in close proximity to the customer, consequently

the service provider can experience conflict of interest. For example a DBBL Bank

employee can guide the customer to divide his whole amount of investment in FDR within

family member and increase the number of account to misguide the Bank & income tax

authorities. In this scenario, customer and employee are in win situation, but the

government does not get actual data about the potential of the customer.

Organizational Relationships:

Working relationships formed between service providers and various role partners such as

customers, peers, supplier’s subordinates. As an example in unethical manner, Bank

employees can provide share dividend information to the outsiders. Here employee is

providing sensitive information to the outsider. This is an unethical activity.

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Honesty:

Honesty is partner of truthfulness, integrity and trustworthiness. Violating the honesty is

an ethical misconduct. DBBL employee can give a misleading commitment that you will get

your ATM card after 3 working days. If that cannot be fulfilled by the bank then that is

breaking of honesty.

Fairness:

Fairness means impartial treatment.Fairness is an outcome of just treatment, equity and

impartiality. Clients should be treated equally and deals based on favoritism should be

avoided. It’s a true fact in DBBL that if a customer is financial sound, maintains good

balance in bank, that customer will get warm welcome and all the kind of services will be

provided to him on his doorstep, vice a versa is also true if a customer is not having very

sound financial condition, nobody will bother to look towards that customer and resolve

his issues.

Communication:

Ethical issue arises when DBBL bank communicates information to the customers or

prospective customers. In one advertisement DBBL claims that they have fastest banking

service. In reality they have the slowest banking service. This is afalse claim. The

communication is not correct.

Controlling Ethical Decision Making:

DBBL can control the Ethical decision making to reduce the adverse effect of unethical

decision. By the following steps unethical activity can be controlled.

Employee Socialization:

Employee socialization is the process by which new employees understand the company's

policies, the internal culture, how the company hierarchy works and the ways to function

effectively in the organization. Developing programs and policies that integrate new

employees into the company helps the company maintain a consistent corporate culture.

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As an example DBBL can recruit or train employees to go on with banks norms and

policies, So that they can work ethically.

Standards of Conduct:

As a part of the socialization process, formal standards of conduct can be presented tpo

bank employees through code of ethics. A code of ethics document may outline the

mission and values of the business or organization, how professionals are supposed to

approach problems, the ethical principles based on the organization's core values and the

standards to which the professional will be held.

As an example, DBBL should provide the standard of conduct so thus employees can know

how to work on a certain situation.

Corrective Control:

Corrective control is the mix of reward and punishment to enforce firm’s code of ethics.

For service firm it’s an effective measure to control unethical activity. Research indicates

that employees of firms that have code of ethics are more prone to believe that violators

of ethical conduct will be punished.

As an example DBBL can communicate the corrective control policy to the employees thus

it will be controlled.

Leadership Training:

Teaching of leadership qualities, including communication, ability to motivate others, and

management, to an individual who may or may not use the learned skills in a leadership

position. Thus they can take ethical decisions in comply with the supervisors.

As an example Management Trainee Officer in DBBL is an example of leadership training.

Who tend to comply with their supervisors to demonstrate loyalty.

Service / Product Knowledge:

Service knowledge is an essential skill. Understanding your products/service features

allows you to present their benefits accurately and persuasively. Customers respond to

enthusiastic sales staff that is passionate about their products and eager to share the

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benefits with them. Employees need to know the updated service knowledge to provide

right service to the customer. If ay shortcoming happens informing the customer is

another aspect of the knowledge. Thus unethical behavior can be controlled.

As an example in DBBL employees are given training regularly for the updated information.

It will control the misleading behavior.

Monitoring of Employee Performance:

Another way to control ethical decision making is to measure employee performance.

Here employee’s performance is measured against the organization ethical standard. This

result must be communicated to the employee. If any employee performs good or least

performed, the result must be communicated to employee. Thus employee will be

cautious for ay unethical activity.

As an example DBBL must maintain a monitoring to measure employee performance. Thus

ethical decision can be controlled.

Stress Long Term Customer Relationship:

Service provider must build trusting relationships between themselves and their customer

to promote a long term mutually beneficial relationship. This can be done aong with the

employee. Company may give misleading information to the customer for a certain

reason. Employees can stress that to long term relationships between the customers and

bank. It can minimize the unethical decision making.

As an example DBBL can mislead information for a quick sale of bank account. Here

employees can build a long term relationship with the customer. Thus it will minimize the

unethical decision making.

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Conclusion:

Dutch Bangla Bank Limited should be true professionals and should adopt best practices of

the industry and should comply to the rules strictly. If any illegal or unethical activity is

suspected by a financial service provider then it should be discouraged and if required

should report to the concerned authorities. There should be independence, meaning that

service provider should not be biased by personal relationship, personal benefits such as

gifts or other forms of compensation. In financial services risk and return factor should be

placed accurately so that customer can make a prudent decision, secondly organization’s

as well as customer’s secrecy should not be compromised for personal gain.

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