Icici Bank Final Management Strategy Final Report 1
Transcript of Icici Bank Final Management Strategy Final Report 1
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Management Strategy
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EXECUTIVE SUMMARY
ICICI BANK LTD. is one of the Indian private bank and has global presence also. It has a
market share of 8.2% which is second largest after SBI. Our report talks about the strategies
adopted by the bank to make it successful. We are also giving some recommendations at last
which bank should follow to continue its success.
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INTRODUCTION
ICICI Bank was established in 1994 by the Industrial Credit and Investment Corporation ofIndia, an Indian financial institution, as a wholly owned subsidiary and in 2001 ICICI merged
with ICICI bank.
ICICI Bank Ltd. is an Indian diversified financial services company headquartered in Mumbai,
Maharashtra. It is the second largest bank in India by assets and third largest by market
capitalization. It offers a wide range of banking products and financial services to corporate andretail customers through a variety of delivery channels and through its specialized subsidiaries in
the areas of investment banking, life and non-life insurance, venture capital and asset
management.
The Bank has a network of 2,575 branches and 8003 ATMs in India, and has a presence in 19
countries, including India.
ICICI Bank is one of the Big Four banks of India, along with State Bank of India, PunjabNational Bankand HDFC Bankits main competitors
ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock
Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the NewYork Stock Exchange (NYSE).
Vision
To be the leading provider of financial services in India and a major global bank.Mission:
We will leverage our people, technology, speed and financial capital to
be the banker of first choice for our customers by delivering high quality, world-classproducts and services
Expand the frontiers of our business globally Play a proactive role in the full realization of India's potential Maintain a healthy financial profile and diversify our earnings across businessman and
geographies.
Maintain high standards of governance and ethics.
Contribute positively to the various countries and markets in which we operate Create value for our stakeholders
(icicibank.com)
http://en.wikipedia.org/wiki/Financial_serviceshttp://en.wikipedia.org/wiki/Mumbai,_Maharashtrahttp://en.wikipedia.org/wiki/Mumbai,_Maharashtrahttp://en.wikipedia.org/wiki/Market_capitalizationhttp://en.wikipedia.org/wiki/Market_capitalizationhttp://en.wikipedia.org/wiki/Big_Four_(banks)#Indiahttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/Punjab_National_Bankhttp://en.wikipedia.org/wiki/Punjab_National_Bankhttp://en.wikipedia.org/wiki/HDFC_Bankhttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://en.wikipedia.org/wiki/National_Stock_Exchange_of_India_Limitedhttp://en.wikipedia.org/wiki/National_Stock_Exchange_of_India_Limitedhttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/National_Stock_Exchange_of_India_Limitedhttp://en.wikipedia.org/wiki/National_Stock_Exchange_of_India_Limitedhttp://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://en.wikipedia.org/wiki/HDFC_Bankhttp://en.wikipedia.org/wiki/Punjab_National_Bankhttp://en.wikipedia.org/wiki/Punjab_National_Bankhttp://en.wikipedia.org/wiki/State_Bank_of_Indiahttp://en.wikipedia.org/wiki/Big_Four_(banks)#Indiahttp://en.wikipedia.org/wiki/Market_capitalizationhttp://en.wikipedia.org/wiki/Market_capitalizationhttp://en.wikipedia.org/wiki/Mumbai,_Maharashtrahttp://en.wikipedia.org/wiki/Mumbai,_Maharashtrahttp://en.wikipedia.org/wiki/Financial_services -
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COMPETITVE ADVANTAGE
ICICI Bank has a competitive advantage of its
Size and global presence across the world vis a vis the private sector banks.
With respect to the public sector banks, the competitive advantage is more on account ofthe technological platforms and the responsive staff and faster service.
It has already retained number 1 bank amongst the private sector banks business wise. The sustainable competitive advantage over its competitors is based on their
technological platforms which requires constant up gradations and investments to make
it robust and sustainable.
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PESTEL ANALYSIS
(oppapers.com)
Economical
GDP Monsoon Inflation Savings and accounts Agriculture credit Interest rates Raising living standard Disposable income
Socio cultural
Changes in life style Literacy rate Demographic of large
population
Shift toward the nuclear
Legal
Reserve bank of INDIAact
Banking regulation act
Political
Government policyand budget
Budget measures Monitory policy FDI limit
Technical
Technology in banks Core banking solutions (CBS) ATM Internet IT services and mobile banking
ICICI
BANK
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VALUE CHAIN FOR ICICI BANK
Firm
Infrastructure
Branch Network ATM Net Banking Mobile Banking Call Centre
Foreign Subsidiaries Foreign Branches
Human
Resource
Management
Develop Appropriate Simulation Training E Learning Program
Performance based
Client FacingIncentive
Employees
Technology
Development
Net Banking, Safe & Secure trading Portals Money2india.com Core
Banking Solution
Call centre, Mobile Banking, ATMs, Data Analytics, Plastic Cards
Source of
Revenue /Deposits
CASA Time Deposit Borrowings from the RBI, Market
Higher Fee Based Income through Forex dealings, Guarantees, LCs, privatebanking and cross selling of Insurance products.Increased NIM through high CASA share and high CD ratio ( Through
Borrowings)
Convenience to the
customers ( Khayaal
Aapka)
Higher Quality Loans
exposure to industry
based on anticipatedeconomic and Market
trends
Structured finance
Customized to thecorporate
requirements
Global Branches
Global Subsidiaries
Technological
platforms
Direct Sales Persons
Technological , nonbranch channels
Different subsidiariessupported by the
direct sales team
Better customer service
Phone Banking facility
E Mail Query
Operations Logistics Marketing & Sales After Sales Service
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PORTERS FIVE FORCES
(docstoc.com)
BARGAINING POWER OF
SUPPLIERS
-Low supplier bargaining power
-Few alternatives available
-Subject to RBI Rules and Regulations
-Not concentrated
-Forward integration
-Nature of suppliers
BARGAINING POWER OF
CUSTOMERS
-High bargaining power
-Low switching cost
-Large no. of alternatives
-Homogeneous service by banks
-Full information available with customers
INDUSTRY RIVARLY
Intense competition
Many private, public,
Co-operative, foreignbanks
THREAT OF NEW
ENTRANT
HIGH-Low barriers to entry
-Government policies are
supportive
-Globalization and
liberalization policy
-High exit barriers
THREAT OF
SUBSTITUTES
Low threat from substitutes
As of now, no alternative to
100% banking
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CRITICAL SUCCESS FACTORS
The CSF of the Banks depends on the Business strategy adopted by the Bank.
ICICI Bank has been in the market since 1990s and can be classified under Analyzer and
defender The CSF required for following these strategiesis,
S No CSF Weight Age
1 Ability of bank operation management 35%
2 Ability of bank marketing 40%
3 Ability of developing bank trademarks 10%
4 Ability of financial market management 15%
The First 3 include success items, which the bank can control, such as computerization, speed ofhandling business, and staff politeness and kindness, etc. However, the fourth factor includes
certain items, which the bank can control, such as the quantity and contents of service items; butothers, such
(Chen, 1999)
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SWOT ANALYSIS
(researchandmarkets.com)
STRENGTHS
BRAND NAME MARKET SHARE HUGE NETWORK DIVERSIFIED PORTFOLIO SALARY ACCOUNT WORKING HOURS TREASURY DEPARTMENT TECHNOLOGY AGGRESSIVE MARKETING ADVANCED
INFRASTRUCTURE ONLINE SERVICES
Weakness
TRANSACTION COST FOCUS ONLY ON HIGH END
CUSTOMERS
DEFENSIVE APPROACH INLENDING
LITTLE PRESENCE OUTSIDEINDIA
POOR CUSTOMERCARE/SERVICE
LESS CREDIT PERIOD
OPPORTUNITIES
Fast growing insurance business inthe country.
Untapped rural markets. An applied research centre to create
opportunities for developing
techniques to provide added-value
services.
Deregulation of Interest rates Increasing individual income Remittances
THREATS
Loss of market share tocommercial banks and HFCs
Higher than expected increase infunding cost Risk of fraud and NPA Lack of infrastructure in rural
areas could constrain investment.
High volume/low cost market isintensely competitive.
Very high competition prevailingin the industry
Threat from credit cardcollections dept.
Unlike Government Banks, anaccount needs a minimum balance
of Rs.10,000
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MARKET ANALYSIS
The total assets of all scheduled commercial banks by end-March 2010 is estimated at `40,90,000 crores. That will comprise about 65 per cent of GDP at current market prices.
There are about 67,000 branches of Scheduled banks spread across India. ICICI has US$91 billion assets and more than 2500 branches. Market share of ICICI bank is 8.2%, HDFC bank is 6.8%, SBI is 21.6
COMPETITOR POSITION MATRIX
In comparison to its competitors, ICICI Bank has a higher total weighted score of 2.94 which is
higher than HDFC (2.84) and Axis (2.16). This implies that ICICI bank is on a better position as
compared to its competitors.
EFE MATRIX
Based on the opportunities and threats to the company the weighted score evaluation was found
to be as 2.81 which is good for the bank.
BCG matrix
This matrix helps to analyze the current position of the SBU with respect to its market share and
relative growth. ICICI bank currently is financially strong. In fact its market share recently
increased to 8.2% and the industry growth rate is also high. Thus Bank can be placed under the
first quadrant in the matrix known as cash Stars.
Diversification
ICICI bank made diversification in 8 areas by making subsidiaries :
ICICI LOMBARD: - the largest leading private general insurance company. ICICI Prudential life insurance Company Ltd:-one of the fastest growing Life
Insurance Company.
ICICI Securities Ltd.:-Provide capital to corporate sector including large, medium andsmall enterprises.
ICICI Prudential asset management Company Ltd. ICICI Venture:-Most successful and one of the largest private equity firms which focus
on area like private equity, takeovers and real estate.
ICICI Home Finance :One of the leading Home loan financing company ICICI direct.com:-Deals in equity, mutual Funds, Life Insurance. ICICI Foundation: Deals with education empowerment. (moneycontrol.com)
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Mergers &Acquisitions
ICICI bank made all horizontal mergers & acquisitions:
2001: Bank of Madurai(Merger with swap ratio 1:2) 2005: Investitsionno-Kreditny Bank (IKB), a Russian bank 2007: Sangli Bank 2010: Bank of Rajasthan
Global Expansion
In 2001 in order to achieve growth, the Board of ICICI Bank decided to expand into international
markets with a focus on the international remittance business. ICICI Bank plans to enter the
global markets through a mix of subsidiaries, offshore branches and representative offices.
Subsidiaries:
ICICI Bank UK PLC(The company's UK subsidiary has established branches in Belgium andGermany)
ICICI Bank Canada ICICI Bank Eurasia LLCBranches
United States Singapore Bahrain Hong Kong Sri Lanka Qatar
Representative offices
United Arab Emirates China, South Africa Bangladesh Thailand Malaysia and Indonesia
(moneycontrol.com)
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Corporate Social responsibility
Corporate Social Responsibility programmes for Elementary Education
Read to Lead Phase I
Read to Lead is an initiative of ICICI Bank to facilitate access to elementary education for
underprivileged children in the age group of 314 years including girls and tribal children fromthe remote rural areas.
Read to Lead Phase II
In Phase II of the Read to Lead programme, ICICI Bank has supported the establishment of 63libraries that will reach out to approximately 7,200 children in the rural areas of Jagdalpur block
of Bastar district in Chhattisgarh. The programme includes building libraries, sourcing books and
conducting various interactive activities to make the library a dynamic centre for learning.
Go Green Initiative
The Go Green Initiative is an organization wide initiative that moves beyond moving people,
processes and customers to cost effective automated channels to build awareness andconsciousness of our environment, our nation and our society.
Green products and services
Instabanking
It is the platform that brings together all alternate channels under one umbrella and gives
customers the option of banking through Internet banking, i-Mobile banking, IVR Banking. This
reduces the carbon footprint of the customers by ensuring they do not have to resort to physicalstatements or travel to their branches.
Vehicle Finance
As an initiative towards more environment friendly way of life, Auto loans offer 50% waiver onprocessing fee on car models which uses alternate mode of energy.
Carbon Footprint Calculator
Inputs include region, user input of the distance traveled in a particular medium of transport
daily, electricity consumed per month and LPG cylinder/piped natural gas used per month. It
calculates the net carbon footprint to create awareness and sensitize people about theenvironment. It also shows the world's and India's average carbon footprint.
Corporate governance
Group Anti Money Laundering Policy
The ICICI Group AML Policy establishes the standards of AML compliance and is applicable toall activities.
Code of Conduct
ICICI Bank has formulated a Code of Business Conduct and Ethics for its directors and
employees
(economictimes.com)
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CONCLUSION
ICICI Bank has a competitive advantage of its size and global presence across the world vis a vis
the private sector banks. With respect to the public sector banks, the competitive advantage is
more on account of the technological platforms and the responsive staff and faster service.
It has already retained number 1 bank amongst the private sector banks business wise. If ICICI
Bank diligently follows the strategy they have defined for companys growth, ICICI should be
able to maintain long term sustainable competitive advantage over its competitors by
continuously innovating its Business Model.
The sustainable competitive advantage over its competitors is based on their technological
platforms which requires constant up gradations and investments to make it robust and
sustainable.
ICICI Bank being analyzer and defender should also focus much on its critical success factors of
marketing and increasing the efficiency and the effectiveness of the bank operations. The staffs
are to be well trained and succession path should be clear
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BIBLIOGRAPHY
Retrieved February Sunday, 2012, from icicibank.com: www.icicibank.com/aboutus/about-us.html
Retrieved February Monday, 2012, from oppapers.com: www.oppapers.com/subjects/pest-analysis-of-
icici-bank-page1.html
Retrieved February Saturday, 2012, from moneycontrol.com: www.moneycontrol.com BANKS -
PRIVATE SECTOR
Retrieved from researchandmarkets.com:
www.researchandmarkets.com/.../icici_bank_limited_swot_analysis.p.
Chen, T.-y. (1999). Babk Marketing , 83.
docstoc.com.. Retrieved from www.docstoc.com/docs/.../Porter-5-Forces-of-Indian-Banking-Indust..
economictimes.com. (n.d.). Retrieved February Friday, 2012, from economictimes.indiatimes.com ...
Stock Quotes ICICI Bank Ltd.
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